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Floating Discount Rate
Source:
Encyclopedia of Banking & Finance (9h Edition) by Charles J Woelfel
(We recommend this as work of authority and you can order
it here)
A central bank's DISCOUNT RATE
which instead of being fixed at a particular level by the central bank
in accordance with its prevailing MONETARY POLICY, as one of the tools
of control of such policy, varies pursuant to the changes in a key MONEY
MARKET rate, such as that on offerings of Treasury bills.
the discount rate of the BANK OF CANADA from 1956 to 1962 floated
0.25% above the Treasury bill rate.
An alleged advantage of a floating discount rate of the central
bank is the fact that it keeps in line with prevailing money rates, instead
of being either above or below the market.
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