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Overnight Rate
The overnight rate is generally the interest rate that large banks use to borrow and lend from one another in the overnight market. In some countries (the United States, for example), the overnight rate may be the rate targeted by the central bank to influence monetary policy. In most countries, the central bank is also a participant on the overnight lending market, and will lend or borrow money to some group of banks. There may be a published overnight rate that represents an average of the rates at which banks lend to each other; certain types of overnight operations may be limited to qualified banks. The precise name of the overnight rate will vary from country to country. Background Throughout the course of a day, banks will transfer money to each other, to foreign banks, to large clients, and other counterparties on behalf of clients or on their own account. At the end of each working day, a bank may have a surplus or shortage of funds (or a shortage or excess reserves in ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Bank Of Canada
The Bank of Canada (BoC; ) is a Crown corporations of Canada, Crown corporation and Canada's central bank. Chartered in 1934 under the ''Bank of Canada Act'', it is responsible for formulating Canada's monetary policy,OECD. OECD Economic Surveys: Canada 2000'. OECD Publishing; 30 August 2000. . p. 45–. and for the promotion of a safe and sound financial system within Canada.Financial Stability and Central Banks: A Global Perspective'. Routledge; November 2002. . p. 41–. The Bank of Canada is the sole issuing authority of Canadian banknotes,Gene Swimmer. How Ottawa Spends, 1996-97: Life Under the Knife'. MQUP; 15 May 1996. . p. 379–. provides banking services and money management for the government, and loans money to Canadian financial institutions. The contract to produce the banknotes has been held by the Canadian Bank Note Company since 1935. The Bank of Canada headquarters are located at the Bank of Canada Building, 234 Wellington Street in Ottawa, Ontario. The buildi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Monetary Policy
Monetary policy is the policy adopted by the monetary authority of a nation to affect monetary and other financial conditions to accomplish broader objectives like high employment and price stability (normally interpreted as a low and stable rate of inflation). Further purposes of a monetary policy may be to contribute to economic stability or to maintain predictable exchange rates with other currencies. Today most central banks in developed countries conduct their monetary policy within an inflation targeting framework, whereas the monetary policies of most developing countries' central banks target some kind of a fixed exchange rate system. A third monetary policy strategy, targeting the money supply, was widely followed during the 1980s, but has diminished in popularity since then, though it is still the official strategy in a number of emerging economies. The tools of monetary policy vary from central bank to central bank, depending on the country's stage of development, inst ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Federal Funds Rate
In the United States, the federal funds rate is the interest rate at which depository institutions (banks and credit unions) lend reserve balances to other depository institutions overnight on an collateral (finance), uncollateralized basis. Bank reserves, Reserve balances are amounts held at the Federal Reserve. Institutions with surplus balances in their accounts lend those balances to institutions in need of larger balances. The federal funds rate is an important benchmark in financial markets and central to the conduct of Monetary policy of the United States, monetary policy in the United States as it influences a wide range of market interest rates. The effective federal funds rate (EFFR) is calculated as the effective median interest rate of overnight federal funds transactions during the previous business day. It is published daily by the Federal Reserve Bank of New York. The federal funds target range is determined by a meeting of the members of the Federal Open Mar ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Central Banks
A central bank, reserve bank, national bank, or monetary authority is an institution that manages the monetary policy of a country or monetary union. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the monetary base. Many central banks also have supervisory or regulatory powers to ensure the stability of commercial banks in their jurisdiction, to prevent bank runs, and, in some cases, to enforce policies on financial consumer protection, and against bank fraud, money laundering, or terrorism financing. Central banks play a crucial role in macroeconomic forecasting, which is essential for guiding monetary policy decisions, especially during times of economic turbulence. Central banks in most developed nations are usually set up to be institutionally independent from political interference, even though governments typically have governance rights over them, legislative bodies exercise scrutiny, and central banks frequently do show responsivenes ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Reserve Ratio
Reserve requirements are central bank regulations that set the minimum amount that a commercial bank must hold in liquid assets. This minimum amount, commonly referred to as the commercial bank's reserve, is generally determined by the central bank on the basis of a specified proportion of deposit liabilities of the bank. This rate is commonly referred to as the cash reserve ratio or shortened as reserve ratio. Though the definitions vary, the commercial bank's reserves normally consist of cash held by the bank and stored physically in the bank vault (vault cash), plus the amount of the bank's balance in that bank's account with the central bank. A bank is at liberty to hold in reserve sums above this minimum requirement, commonly referred to as ''excess reserves''. In some areas such as the euro area and the UK, tightening of reserve requirements in the home country is found to be associated with higher lending by foreign branches. For this reason, the reserve ratio is some ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Fractional Reserve Banking
Fractional-reserve banking is the system of banking in all countries worldwide, under which banks that take deposits from the public keep only part of their deposit liabilities in liquid assets as a reserve, typically lending the remainder to borrowers. Bank reserves are held as cash in the bank or as balances in the bank's account at the central bank. Fractional-reserve banking differs from the hypothetical alternative model, full-reserve banking, in which banks would keep all depositor funds on hand as reserves. The country's central bank may determine a minimum amount that banks must hold in reserves, called the " reserve requirement" or "reserve ratio". Most commercial banks hold more than this minimum amount as excess reserves. Some countries, e.g. the core Anglosphere countries of the United States, the United Kingdom, Canada, Australia, and New Zealand, and the three Scandinavian countries, do not impose reserve requirements at all. Bank deposits are usually of a r ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Excess Reserves
Excess reserves are bank reserves held by a bank in excess of a reserve requirement for it set by a central bank. In the United States, bank reserves for a commercial bank are represented by its cash holdings and any credit balance in an account at its Federal Reserve Bank (FRB). Holding excess reserves long term may have an opportunity cost if higher risk-adjusted interest can be earned by putting the funds elsewhere. For banks in the U.S. Federal Reserve System, excess reserves may be created by a given bank in the very short term by making short-term (usually overnight) loans on the federal funds market to another bank that may be short of its reserve requirements. Banks may also choose to hold some excess reserves to facilitate upcoming transactions or to meet contractual clearing balance requirements. The total amount of FRB credits held in all FRB accounts for all commercial banks, together with all currency and vault cash, forms the M0 monetary base. Impact on ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Central Bank
A central bank, reserve bank, national bank, or monetary authority is an institution that manages the monetary policy of a country or monetary union. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the monetary base. Many central banks also have supervisory or regulatory powers to ensure the stability of commercial banks in their jurisdiction, to prevent bank runs, and, in some cases, to enforce policies on financial consumer protection, and against bank fraud, money laundering, or terrorism financing. Central banks play a crucial role in macroeconomic forecasting, which is essential for guiding monetary policy decisions, especially during times of economic turbulence. Central banks in most developed nations are usually set up to be institutionally independent from political interference, even though governments typically have governance rights over them, legislative bodies exercise scrutiny, and central banks frequently do show resp ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
United States Of America
The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 states and a federal capital district, Washington, D.C. The 48 contiguous states border Canada to the north and Mexico to the south, with the semi-exclave of Alaska in the northwest and the archipelago of Hawaii in the Pacific Ocean. The United States asserts sovereignty over five major island territories and various uninhabited islands in Oceania and the Caribbean. It is a megadiverse country, with the world's third-largest land area and third-largest population, exceeding 340 million. Its three largest metropolitan areas are New York, Los Angeles, and Chicago, and its three most populous states are California, Texas, and Florida. Paleo-Indians migrated from North Asia to North America over 12,000 years ago, and formed various civilizations. Spanish colonization led to the establishment in 15 ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Overnight Market
The overnight market is the component of the money market involving the shortest term loan. The overnight market is primarily used by banks and other financial institutions. Lenders agree to lend borrowers funds only "overnight", i.e., the borrower must repay the borrowed funds plus interest at the start of business the next day. Given the short period of the loan, the interest rate charged in the overnight market, known as the overnight rate is, generally speaking, the lowest rate at which banks lend money. Most of the activity in the so-called overnight market in fact occurs in the morning immediately after the start of business for the day. Banks and financial institutions analyse their cash reserves on a daily basis, and assess whether they have an excess or a deficit of cash with respect to their needs. More specifically, deposit-taking financial institutions (such as banks) begins with forecasting the institution's and its clients' liquidity needs over the course of that d ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Bank
A bank is a financial institution that accepts Deposit account, deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets. As banks play an important role in financial stability and the economy of a country, most jurisdictions exercise a high degree of Bank regulation, regulation over banks. Most countries have institutionalized a system known as fractional-reserve banking, under which banks hold liquid assets equal to only a portion of their current liabilities. In addition to other regulations intended to ensure accounting liquidity, liquidity, banks are generally subject to minimum capital requirements based on an international set of capital standards, the Basel Accords. Banking in its modern sense evolved in the fourteenth century in the prosperous cities of Renaissance Italy but, in many ways, functioned as a continuation of ideas and concepts o ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
