Adjustment Credit

Dictionary Says

Definition of 'Adjustment Credit'

A short-term loan made by a Federal Reserve Bank to a smaller commercial bank as needed to maintain reserve requirements and support short-term lending. These advances are a very common form of borrowing from a Federal Reserve Bank and are most often used when interest rates are high and money supply is short.
Investopedia Says

Investopedia explains 'Adjustment Credit'

Commercial banks are required to hold a certain amount of funds in reserve in order to assure customers that their money is available upon request. When reserves are low, adjustment credits allow banks to continue to lend through advances by the Federal Reserve that are secured through the bank's own promissory notes.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Federal Reserve Bank

    The banks that ...
  2. Reserve Requirements

    Requirements ...
  3. Federal Reserve System - FRS

    The central bank ...
  4. Monetary Policy

    The actions of a ...
  5. Bank Run

    A situation that ...
  6. Promissory Note

    A written, dated ...
  7. Excess Reserves

    Capital reserves ...
  8. Free Reserves

    A measurement of ...
  9. Federal Reserve Board - FRB

    The governing ...
  10. Alan Greenspan

    The former ...

Articles Of Interest

  1. Get To Know The Major Central Banks

    The policies of these banks affect the currency market like nothing else. See what makes them tick.
  2. How do central banks acquire currency reserves and how much are they required to hold?

  3. How The Federal Reserve Was Formed

    Find out how this institution has stabilized the U.S. economy during economic downturn.
  4. Promissory Notes: Not Your Average IOU

    These may be a handy way to borrow money, but this convenience does not come without risk.
  5. Analyzing A Bank's Financial Statements

    A careful review of a bank's financial statements can help you identify key factors in a potential investment.
  6. Borrowing Smart In A Debt-Filled World

    Leveraging your money can have many perks, but it's not always the smartest financial plan.
  7. Credit Scams To Watch Out For

    More than 30 million people were victims of fraud in 2007. Will you be next?
  8. 7 Misconceptions About The Federal Reserve

    There are many fallacies about the Fed. The following misconceptions are among the most popular.
  9. The Link Between The Fed, Money, Debt And Taxes

    Assets on the Fed's balance sheet, money supply level, national debt level and economic production should be maintained in equilibrium.
  10. A Primer On Inflation

    Inflation has a negative connotation, but is it all bad or does it offer some tangible benefits?

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center