In general, a commitment of cash in which the investor makes its capital available to a third party in return for the transfer of ownership or creditor rights. Section 266 of the German Commercial Code (HGB) contains a list. – From the point of view of a company, all income-producing products with which sums of money can be invested within contractually agreed periods and which are therefore not required for daily payment transactions or for financing operational projects. In this case, they are also referred to as uncommitted funds. – In another sense, the purchase of interest-bearing – mostly foreign – securities instead of using money to expand or improve the capital stock. Said in this sense especially when – with low central bank interest rates for the purpose of stimulating fixed investment, companies borrow from banks at low interest rates to buy securities or finance a share buyback. – But low interest rate policies also generally make it cheaper for banks to buy securities than to lend to companies. Central banks also support these operations by extending credit to institutions almost only against deposit of financial products, and no longer against the acceptance of first-class bills, as used to be the case in the rediscount business. In this way, the supply of money to the economy is decoupled from the real goods economy (here understood as the production and trade of goods, especially of agricultural and mining products that are processed, finished and transported in order to be sold to ultimate buyers). – See cash, discount policy, commitment, European Master Agreement, financial intermediaries, financial market, investment firm, growth meaning, monetary investment, investment, liquidity, rediscount rate, velleïty, asset investment, polygon, magic, bill credit.
Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent!
University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: email@example.com