rediscount

A bank manager decides to rediscount a customer's promissory note.

Definition

1. Verb (transitive):
   • To discount again: "rediscount" means to discount a financial instrument, such as a bill of exchange or promissory note, that has already been discounted. This is typically done by a central bank or financial institution when it purchases a discounted instrument from another bank to provide liquidity.

Usage Examples

• (The central bank purchased an already-discounted financial instrument to provide funds.)
• (Banks sell previously discounted notes to the central bank for cash.)

Advanced Usage

• "rediscount rate": the interest rate charged by a central bank when it rediscounts financial instruments for commercial banks.

  • The Federal Reserve lowered the rediscount rate to encourage borrowing. (The central bank reduced the cost of rediscounting to stimulate lending.)

• "rediscount window": a facility at a central bank that allows commercial banks to rediscount eligible instruments.

  • The bank accessed the rediscount window to obtain emergency funds. (The bank used the central bank's lending facility.)

Variants and Related Words

• Rediscountable (adj): capable of being rediscounted.

  • Only certain high-quality bills are rediscountable. (Only those bills can be discounted again by the central bank.)

• Rediscounting (n, gerund): the act or process of discounting again.

  • Rediscounting helps maintain liquidity in the banking system. (The process of discounting again aids cash flow.)

Synonyms

• Refinance: to replace an existing loan with a new one, often at a lower rate (broader term).
• Re-discount: another spelling variant of "rediscount."

Related Idioms (none directly related)

• No common idioms are associated with "rediscount," as it is a technical financial term.