What are the measures of Lombard?

Lombard rates are interest rates charged banks for loan usually delivered by the central government. In the most basic sense, Lombard rates are set to repay the loans offered by the central bank by smaller credit institutions. These banks are supplied with capital, which in turn lend to other debtors and open a loan on the market. To use the repayment request, the central bank charges the interest rate to the bank, which is handed over to the debtor and creates revenue for the bank. The collateral comes in the form of financial securities and life insurance issued by the bank itself. For example, if the cash rate is set at five percent, the Lombard rate is set at six percent. The central bank charges a smaller bank six percentage of the loan, while the smaller bank turns and charges its debtor ten percent. This Means Bank earns profits, provides losses for securities and uses these securities for a loan. The Low Interest Rate Loan is forced to deliver securities to the central bank.

The two countries most recognized as cooperation with the Lombard credit system are Germany and the United States. In Germany, the central bank issues loans to many financial institutions in order to maintain the economy through accessing loans for businesses. In the United States, this maintains a federal reserve system, a group of private banks working for the government. Both systems borrow institutions for lower rates than other banks borrowing each other.

During the financial instability period, the Lombard rate method is used in conjunction with discount rates set by the central government or bank. If the discount rate is set to Foprocento, then the Lombard is set just below this figure. This promotes borrowing from the central government rather than other banks. Unfortunately, when the discount interest rate is set almost zero, as is the case with extreme recessions, the Lombard rate almost becomes a point. UD lendingIt rises almost the same costs from the central bank or private banks.

Critics of the system point to the reliability of the federal government or central banks as a threat to the sovereignty of private business. When governments interfere with the country's financial sector, it will no longer be involved in the economy. The balance between the central bank as the "Last Possibilities" and to be the primary creditor in the financial sector is a delical balance between the free market system and economic control from the central body.