What is Cryptocurrency A new word emerged in our lives two months after the beginning of the recession of 2008 and gradually transformed from a vague expression ("virtual coin") to the vocabulary used to characterize the new economy. On June 9, 2009 the first bitcoin was released by an anonymous person called Satoshi Nakamoto. For different reasons like the sub-prime crisis, Nakamoto, claimed he is a Japanese man in his 30's, said he gave the open protocol in 2007. Today the new coin is called a "Digital Asset" and decentralization is the principal idea behind it: there's no main institution responsible for regulating it. The most familiar and traded form of Blockchain's technology, Bitcoin, who has crossed the $15,000 lines way back and has shows an image of exponential increase in the past few months. The great advantage of blockchain technology is that it doesn't have to keep records for a large central computer or big managing company. With this ...
What is Interest Rate
Rates of interest are the borrowing cost of money. They are the creditors that earn money for loans. Such rates change constantly and differ according to the lender and the creditworthiness. Not only do interest rates keep the economy going, they also attract people who invest, spend and repay. But most of us don't care to really think about how or who decides how it is applied.
Role of Central Bank: Short Term Interest Rates
Short-term interest rates are determined by central banks in countries using a centralized banking model. Economic observers from a government develop a policy to ensure stable prices and liquidity. This policy is tested regularly so that the money supply in the economy is not too large, leading to price increases, nor too low, leading to price decreases.
In India, the Reserve Bank of India (RBI) determines interest rates. The Reserve Bank of India also establishes the currency and interest-rate short-term direction. Central banks' acts impact short-term and variable rates of interest.
If monetary policy makers want to reduce the supply of money, they will increase the interest rate and make depositing money more attractive and reduce central bank borrowing. On the contrary, if the central bank decides to increase the supply of funds, it must increase the interest rate that makes borrowing and spending more attractive.
Deposit & Loan Rates: Retail Banks
Retail banks also take part in the interest rate controls. They offer loans and mortgages that may vary according to several factors, including their requirements, the market and the individual consumer.
For instance, an individual with lower credit value may be more vulnerable to default and thus pay a higher interest rate. It is the same with credit cards. Banks can give various customers different rates, as well as which the cost when missed payment, bounced payment or other services such as balance transfers and foreign exchange are offered.
How long-term rates affect treasury investors
Rates on long-term loans, including fixed interest rate mortgages of 15 years and 30 years, are set for the length of such a loan.
The same applies to non-revolving loan interest rates. These are usually mortgage loans for vehicles, education and broad home shopping, such as furniture. These rates are typically higher than the main rates of interest, but lower than revolving loans.
Whether you have a fixed-rate long-term mortgage, car loans, student loans, or related non-revolving mortgage loans, this is where it falls. These notes also impact certain level of the annual percentage of credit cards.
As these loans usually correspond to one, three, five or ten years, the rates vary with the rates for one, five and ten years in Treasury notes.
Individual Factors
The interest rate may vary from those established under the processes above for any individual loan regardless of whether this is an individual loan or a mortgage or a company bond issue. For example, a risky borrower who has a low credit score pays higher rates for a loan with the same terms as a high credit score low-risk borrower.
In addition:
• Longer maturity credit rates are also expected to increase than short-term credit.
• Collateral-backed loans will be lower than unsecured debts.
• Embedded bonds would have higher interest rates than non-callable ones.
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