# Credit rating discount (detoriated standing)

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- Post ID: 587348
- Modified: 2023-07-25T20:59:13+00:00
- Language: en

## Definition

Banks that take on very high and/or unusually long-term debt to the central bank have obviously disregarded the Golden Banking Rule. They are considered to be unsound, which leads to a lower classification of their creditworthiness, their rating. As a result, they have to expect worse conditions on the nostro market, in effect higher refinancing costs. As in the USA, a central bank can subject such institutions to special supervision. - All other things being equal, government bonds are traded at a credit rating discount if the ratings for the countries concerned are poor. - See ECB Monthly Bulletin, September 2005, pp. 35 f. (with overviews). 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: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

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