Rate of refinancing
The rate of refinancing (or rate refi , or rate repo ) is the main thing directing Taux central banks; it makes it possible to control the economic activity.
The rate of refinancing is the Interest rate from day to day fixed by the Central bank, by which are remunerated the surpluses of liquidities of the Banque S and financial institutions placed near the central bank, and the rate of refinancing from which can borrow these same economic agents near the central bank.
The rate refi allows by fixing the “cost of the money” on the Money market, to control the economic Investissement and thus to encourage the Economic activity during the time of hollow, or to slow down the over-investment (in nonprofitable projects) for the periods of inflationary overheating.
Financial incidences of the rate of refinancing
Many rates of credit and short-term saving are more or less narrowly correlated at the rate refi. Indeed, the trade banks borrow from the central banks at the rate refi or the Discount rate, and lend again the funds a little expensive. Thus, at the beginning of 2005, the European Central bank (ECB) ready to 2% (today to 4%) at the banks, which are lent again between them on the interbank market in the neighborhoods of 2,02% per day (index EONIA).
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