process by which a Federal Reserve Bank discounts a negotiable instrumentor commercial finance paper, such as a bill of exchange or acceptance that already has been discounted by a bank. Federal Reserve Banks are empowered to accept loans and other bank obligations as collateral for advances at the discount window. As a practical matter, however, rediscounting of commercial obligations accepted by a bank, called eligible paper, that comply with the Federal Reserve's criteria for discounting, has occurred infrequently in the last 30 years.
to discount short-term negotiable debt instruments, such as bankers' acceptances and commercial paper, that have been discounted with a bank, that is, exchanged for an amount of cash adjusted to reflect the current interest rate.
discount short-term negotiable debt instruments, such as banker's acceptances and commercial paper, that have been discounted with a bank-in other words, exchanged for an amount of cash adjusted to reflect the current interest rate. The bank then discounts the paper a second time for its own benefit with another bank or with a Federal Reserve bank. Rediscounting was once the primary means by which banks borrowed additional reserves from the Fed. Today most banks do this by discounting their own notes secured by government securities or other eligible paper. But rediscount rate is still used as a synonym for discount rate, the rate charged by the Fed for all bank borrowings.
