Money. Credit. Banks. Types of nominal interest rates (lecture notes)

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Money. Credit. Banks. Types of nominal interest rates (lecture notes)

Lecture notes, cheat sheets

Directory / Lecture notes, cheat sheets

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Types of nominal interest rates

1. basic bank rate (prime rate) - the minimum rate established by each bank for loans provided.

2.% money market rates - rates on short-term debt financial instruments.

3.% rates on interbank loans (IBK) - refer to % money market rates.

Its types:

▪ announced rates for granting loans - at them banks offer loans to each other (LIBOR, PIBOR, FIBOR).

▪ announced rates for attracting loans - banks are ready to buy interbank loans at them (LIBID, PIBID, FIBID).

▪ actual interbank lending rate - the average rate on actually issued loans on the interbank market (MIACR).

▪ rates on short-term interbank loans - rates on actually granted short-term interbank loans - INSTAR.

4.% rate on treasury bills - according to it, the Central Banks of Western countries sell treasury bills on the open market.

5.% capital markets rate - rates for medium-term and long-term government. obligations.

There are other types of bets.

Interest arbitrage - income from differences in % rates in two related markets.

Author: Shevchuk D.A.

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