The Central Bank

What is the Discount (Bank) Rate and how does it relate to Discount Policy?

The Discount or Bank Rate, which is set by the Central Bank of The Bahamas, is the interest rate charged by the Bank on loans to banks. Commercial banks usually respond to changes in the Discount Rate with proportionate changes in their Prime Lending Rate. The Discount Rate is an instrument of Discount Policy, and is used by the Bank to influence the flow of money and credit in a desired direction. For instance, since people's borrowing decisions, whether for investment or consumption purposes, is influenced by the interest rate charged on that borrowing, an increase(decrease) in the Discount Rate signals a desire by the Bank to slow(quicken) the rate of increase in credit expansion, since higher(lower) interest rate charges are likely to discourage(encourage) new borrowing.

  1. What are the main tools employed by the Central Bank in performing its functions?
  2. What are reserve requirements?
  3. What is the Discount (Bank) Rate and how does it relate to Discount Policy?
  4. What have been the changes in the Discount (Bank) Rate over the past few years?
  5. Does the Central Bank accept deposits from or make loans to the general public?
  6. How does the Central Bank make money?
  7. Who are the Bank's former Governors and Deputy Governors?
  8. Is the Central Bank a Government department?
  9. Is there any significance to the selection of the Sandollar as the Central Bank of The Bahamas' Logo?
  10. What Publications does the Central Bank produce and when are they made available to the public?
  11. How can I get copies of the Bank's publications and is there a charge or fee for them?
  12. What is monetary policy and how is it different from fiscal policy?

Available FAQs