Subject:
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Re: questions on current events
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Newsgroups:
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lugnet.off-topic.debate
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Date:
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Wed, 19 Dec 2001 10:02:13 GMT
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Viewed:
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512 times
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"Kirby Warden" <inourimage@msn.com> writes:
> A bank can borrow from the federal reserve. There is interest
> tacked on to what the bank must pay back. Obviously, how much
> money the bank gets to keep will have an affect on its customers,
> but the federal interest rate has little or no influence on a
> bank's customer's interest.
This is probably true. But in a market in which the competition works
well, I would say that that the federal interest rate _should_ affect
the rate offered to the customers.
In Norway, there are always some banks which lower their interest
rates whenever the National Bank lower their rates. If the rest of
the banks don't follow this example, they stand a chance of seeing a
massive outflux of customers. So in practice, a National Bank rate
change is almost always reflected in the private market.
I don't think that the goverment should control the rates offered to
the public. But if all the banks retain their interest rates when the
federal bank has lowered it's interest rate from 7% to 1,75% in a
year(*), I think it looks like there is virtually no competition in
the market, which cannot be a good thing. But I know virtually
nothing about the US credit card market, so take this with a grain of
salt.
Fredrik
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(*) If my mind serves me correctly.
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Message is in Reply To:
 | | Re: questions on current events
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| (...) I've read about the shear basics on this subject so what I say about it is certainly arguable, however, maybe I can better clarify what I think I know. A bank can borrow from the federal reserve. There is interest tacked on to what the bank (...) (23 years ago, 18-Dec-01, to lugnet.off-topic.debate)
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