Key statistical concept
Overnight or Immediate Rate here is used as a term to describe official discount rates and call-money rates. The official discount rate is the rate at which central banks make advances to, or discount eligible bills of exchange for, selected banks and other financial intermediaries. There are often strict rules regarding the quality of securities which will be accepted as collateral for the advances and regarding the eligibility of bills of exchange to be discounted. In the case of the latter, normally they must be of limited duration to maturity, commercial and not financial paper, and guaranteed by parties known to be solvent. Additionally, there are limits on the amount of credit available. Call money and day-to-day loans play a predominant role in interbank money dealings and between banks and money market dealers. Day-to-day loans usually refer to operations on the money market between banks to balance temporary surpluses and shortages of liquidity. These operations are sometimes conducted through the central bank. Call money generally refers to secured or unsecured ‘at-call’ loans made by banks to money market dealers. It is occasionally used for the flow of funds from financial institutions with an excess of their own funds and deposits (in relation to customers’ demands) to institutions with a shortage.
Glossary Terms: Short-term interest rates
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