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Accounting > Discount Rate

The following information is about Discount Rate.

Discount Rate Defined

is the interest rate that the Federal Reserve of the U.S. Government charges a U.S. bank to borrow funds when a bank is temporarily short of funds. Collateral is necessary to borrowand such borrowing is quite limited because the Fed views it as a privilege to be used to meet short-term liquidity needsand not a device to increase earnings.

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