Bank rate. This term is generally applied to a discount rate in a foreign financial centre. In
London it means the discount rate of the Bank of England, whereas the open market rate means
the rate of other banks and bankers and bill brokers (dealers in bank and commercial paper). In
Paris the bank rate is the rate of the Bank of France; in Berlin the bank rate is the rate of the
Imperial Bank of Germany, and so on. In New York the term bank rate is used to distinguish the
uniform rate made by the banks from the varying rates made by other lenders.
In London when the Bank of England makes a rate the other lenders adopt it if possible or
sometimes even quote a higher rate, but if they find they cannot do business at it they make a
lower rate, and so it is in Paris, Berlin, etc. In New York if other lenders cannot do business at the
rate adopted by the banks they make a lower one.