Bills Payable


DEFINITION of 'Bills Payable'

Similar to accounts payable, this term is used to describe a bank's indebtedness to other banks, principally a Federal Reserve Bank, that is backed by collateral consisting of the bank's promissory note and a pledge of government securities. In other words, bills payable is the money a bank borrows, mainly on a short-term basis, and owes to other banks.

BREAKING DOWN 'Bills Payable'

The main thing a bank needs to operate is liquidity, which means that banks need to have a lot of available cash. Banks borrow money from other banks in order to maintain ample liquidity levels.

  1. Liquidity

    The degree to which an asset or security can be quickly bought ...
  2. Credit

    1. A contractual agreement in which a borrower receives something ...
  3. Bank

    A financial institution licensed as a receiver of deposits. There ...
  4. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to ...
  5. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin ...
  6. Monetary Policy

    Monetary policy is the actions of a central bank, currency board ...
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