from The American Heritage® Dictionary of the English Language, 4th Edition
- transitive v. To discount again.
- n. The act of rediscounting.
- n. Commercial paper that is discounted a second time. Often used in the plural.
from Wiktionary, Creative Commons Attribution/Share-Alike License
- v. To discount again
- n. A second or subsequent discount
The so-called rediscount rate—the rate the central bank pays commercial banks on their surplus funds—has been raised to 12% from 7%, the State Bank of Vietnam said in a statement posted on its website.
"The central bank's decision to sharply raise its rediscount rate is aimed at encouraging banks to hold more funds, after it said it wants to cut credit growth to less than 20% and limit money supply expansion to less than 16% this year," said an analyst with Hanoi-based Agribank.
The bank kept its benchmark rate unchanged at 9%, where it has been since November, and the rediscount rate at 12%, after raising it from 7% last month.
The central bank also increased the rediscount rate—the interest rate banks pay when they borrow from the central bank by selling it commercial bills on a short-term basis—to 13% from 12%.
The 1 percentage point increase in the recapitalization and rediscount rates makes it more expensive for banks to borrow from the central bank, potentially crimping credit growth.
Luz Lorenzo, an economist at ATR-Kim Eng Securities, said the central bank may consider reducing its budget for the peso rediscount facility.
It increased the interest rate on its peso rediscount facility, where qualified banks can borrow from the monetary authority, by a half-percentage point.
To accomplish this, rules regarding what the Federal Reserve could accept for rediscount purposes, such as commercial paper, was expanded.
On Friday it also raised the rediscount annual interest rate, or the rate it pays commercial banks on their surplus funds, to 7% from 6%.
The People's Bank of China said Wednesday that it had raised the rediscount and refinancing rates Sunday, making it more expensive for banks to borrow from the central bank.
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