Discounting means that customers (ticket holders) sell unexpired bills to discount banks in order to get cash in advance. The discount of bills handled by general industrial and commercial enterprises to banks belongs to this category.
Cash discount refers to the transfer of unexpired bills purchased by banks to other commercial banks. Cash discount is generally a way for commercial banks to lend money to each other.
Re-discount refers to the behavior that the discount bank discounts the unexpired discounted bills to the People's Bank of China and obtains re-loans from the People's Bank of China by transferring the bills. Rediscount is a credit business of the central bank and a monetary policy tool used by the central bank to implement monetary policy.
Open market business, rediscount and deposit reserve are also called the three major monetary policy tools of the central bank. Commercial banks apply for funds from the central bank with discounted and unexpired bank acceptance bills. After examination and approval, the central bank gives commercial banks the funds they need, which is rediscount. Discount is a way for commercial banks to provide funds to enterprises, and rediscount is a way for central banks to provide funds to commercial banks, both of which are based on the transfer of valid bills, namely bank acceptance bills. The rediscount not only affects the financing cost of commercial banks, restricts the credit expansion of commercial banks and controls the total money supply, but also can selectively finance different kinds of bills according to the requirements of national industrial policies and promote the adjustment of economic structure.