As you know, one of the main and most significant channels of funding of banks is the funds of depositors. In addition, there also exists interbank lending. But banks have many other channels through which they can receive funds for their activities. Below are examples of additional funding of banks.
First of all, it is worth considering the so -called repo transactions. This is the provision of credit funds by the Central Bank on security securities. That is, the Central Bank holds an auction at which it offers banks loans at a certain interest rate and for a certain period. And the pledge of these loans are securities that banks. Legally and technically, the repo transaction may look quite difficult – the agreement on the purchase/sale of papers is signed with its subsequent sale/purchase. The scheme is somewhat confusing. However, in reality, the Central Bank simply loans in this way large banks. Loan term – for 1 day, for a week and three months (91 days). I must say that repo is the most important source of additional funding of banks by the Central Bank.
Another channel of liquidity is on the key to non -market assets or, more simply, illiquid papers, which, as a rule, are not in demand in the market.
There are still pawnshop-credit auctions when banks can sell their lots with loans. As well as loans from the Central Bank on the bail of gold.