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Definition of Central Bank
A public agency responsible for regulating and controlling an economy's monetary and financial institutions. It is the sole money-issuing authority.
In the words of Warren Buffet, Bill Bane Sr., is, "a great American and one of the last real traders
An international bank headquartered in Basel, Switzerland, which
A set of transactions (also called a debt-equity swap) in which a firm buys a country's dollar bank
central bank switching of government deposits between the central bank and commercial banks.
The central bank of the U.S., established in 1913, and governed by the Federal
The central banking authority responsible for monetary policy in the United States.
The central bank in the United States, responsible for setting interest rates.
A country's decision to allow its currency value to freely change. The currency is not
A fund containing the central bank's holdings of foreign currency or claims thereon.
A banking system in which banks hold only a fraction of their outstanding deposits in cash or on deposit with the central bank.
Also known as "dirty" float, this is a system of floating exchange rates with central bank
Actions taken by the central bank to change the supply of money and the interest rate and thereby affect economic activity.
Cash plus deposits of the commercial banks with the central bank.
The debt owed by the government as a result of earlier borrowing to finance budget deficits. That part of the debt not held by the central bank is the publically held national debt.
Buying or selling of bonds by the central bank.
Sale of bonds by the government to the central bank.
Reserves that the central bank requires commercial banks to hold.
A foreign currency held by a central bank or monetary authority for the purposes of
Fraction of total deposits that a commercial bank is required by the central bank to hold in the form of reserves.
Commercial banks' reserves consist of their holdings of cash and their balances in deposits with the central bank. See also foreign exchange reserves, excess reserves, required reserves, reserve requirement.
The risk that a central bank will impose foreign exchange regulations that will reduce or
central bank action offsetting money supply changes automatically generated by a balance of payments surplus or deficit under a fixed exchange rate system.
ABM (automated banking machine)
A bank machine, sometimes referred to as an automated teller machine (ATM).
A form of organization commonly used by foreign banks to enter the U.S. market. An agency
BAN (Bank anticipation notes)
Notes issued by states and municipalities to obtain interim financing for
Money in a bank cheque account, the difference between receipts and payments.
Bank collection float
The time that elapses between when a check is deposited into a bank account and when the funds are available to the depositor, during which period the bank is collecting payment from the payer's bank.
Bank discount basis
A convention used for quoting bids and offers for treasury bills in terms of annualized
A draft addressed to a bank.
A guaranteed form of payment which is issued in amounts over $5,000.
Line of credit granted by a bank to a customer.
Money owed to the bank in a cheque account where payments exceed receipts.
The process of taking the balances from the bank statement and the general ledger and making adjustments so that they agree.
A comparison between the cash position recorded on a company’s
A computer message system linking major banks. It is used not for effecting payments, but as a
A short-term credit investment created by a non-financial firm and guaranteed by a
A bill of exchange, or draft, drawn by the borrower for payment on a specified date, and accepted by a chartered bank. Upon acceptance, the bill becomes, in effect, a postdated certified cheque.
State of being unable to pay debts. Thus, the ownership of the firm's assets is transferred from
The reorganization or liquidation of a firm that cannot pay its debts.
Bankruptcy cost view
The argument that expected indirect and direct bankruptcy costs offset the other
The risk that a firm will be unable to meet its debt obligations. Also referred to as default or insolvency risk.
The argument that expected bankruptcy costs preclude firms from being financed entirely
a management style that exists when top management
Clearing House Interbank Payments System (CHIPS)
An international wire transfer system for high-value
A privately owned, profit-seeking firm that accepts deposits and makes loans.
System whereby customers make payments to a regional collection center which transfers funds to
A merchant banking subsidiary set up by several banks that may or may not be of the
a management style that exists when top
Eligible bankers' acceptances
In the BA market, an acceptance may be referred to as eligible because it is
A bank that regularly accepts foreign currency denominated deposits and makes foreign currency loans.
Export-Import Bank (Ex-Im Bank)
The U.S. federal government agency that extends trade credits to U.S.
Federal Financing Bank
A federal institution that lends to a wide array of federal credit agencies funds it
Federal Home Loan Banks
The institutions that regulate and lend to savings and loan associations. The
Federal Reserve Banks
The twelve district banks in the Federal Reserve System.
Foreign banking market
That portion of domestic bank loans supplied to foreigners for use abroad.
International Bank for Reconstruction and Development - IBRD or World Bank
International bank for Reconstruction and Development makes loans at nearly conventional terms to countries for projects of high
International Banking Facility (IBF)
International banking Facility. A branch that an American bank
Financial intermediaries who perform a variety of services, including aiding in the sale of
Middleman between a corporation issuing new securities and the public. The middleman buys the securities issue outright and then resells it to customers. Also called an underwriter.
A legal proceeding for liquidating or reorganizing a business.
A British term for a bank that specializes not in lending out its own funds, but in providing
A financial institution that engages in investment banking functions, such as advising clients in mergers and acquisitions, underwriting securities and taking debt or equity positions.
Money center banks
banks that raise most of their funds from the domestic and international money markets, relying less on depositors for funds.
PIBOR (Paris Interbank Offer Rate)
The deposit rate on interbank transactions in the Eurocurrency market
A bankruptcy in which a debtor and its creditors pre-negotiate a plan or
Society for Worldwide Interbank Financial Telecommunications (SWIFT)
A dedicated computer network to support funds transfer messages internationally between over 900 member banks worldwide.
Wholesale mortgage banking
The purchasing of loans originated by others, with the servicing rights
A multilateral development finance agency created by the 1944 Bretton Woods, New
The International bank for Reconstruction and Development, an international organization that provides long-term loans to developing countries to improve their infrastructure.
The Treasury and federal agencies are moving to a book-entry system in which securities are not represented by engraved pieces of paper but are maintained in computerized records at the
Commonly sold in the form of reducing term life insurance by lending institutions, this is life insurance with a death benefit reducing to zero over a specific period of time, usually 20 to 25 years. In most instances, the cost of coverage remains level, while the death benefit continues to decline. Re-stated, the cost of this kind of insurance is actually increasing since less death benefit is paid as the outstanding mortgage balance decreases while the cost remains the same. Lending institutions are the most popular sources for this kind of coverage because it is usually sold during the purchase of a new mortgage. The untrained institution mortgage sales person often gives the impression that this is the only place mortgage insurance can be purchased but it is more efficiently purchased at a lower cost and with more flexibility, directly from traditional life insurance companies. No matter where it is purchased, the reducing term insurance death benefit reduces over a set period of years. Most consumers are up-sizing their residences, not down-sizing, so it is likely that more coverage is required as years pass, rather than less coverage.
Payable through drafts
A method of making payment that is used to maintain control over payments made
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