Bank paper. This term is an abbreviation of bankable paper; it means commercial paper
(acceptances, or in other words, bills of exchange or drafts which have been accepted and
promissory notes) that is of such good quality that a bank will readily discount (buy) it. Accordingly,
it also applies to commercial paper when the paper bears the indorsement of a bank. The usual
manner in which a bank becomes the indorser of commercial paper is in rediscounting. First it
buys (discounts) the paper and then it sells (rediscounts) it if it desires cash or if it can make a
satisfactory profit by a sale. The paper brings a better price (the discount is less) with the bank's
indorsement than it would bring without the bank's indorsement.