What is a 'Marginal Lender'

A marginal lender is a lender that will only make a loan at or above a particular rate of interest.

BREAKING DOWN 'Marginal Lender'

A marginal lender should not be confused with a margin lender, which is a brokerage that lends money to investors who wish to make trades with borrowed funds using collateral they already own. Margin trading is risky because it can amplify investment losses.

A marginal lender should also not be confused with marginal lending, which is the overnight liquidity provided to banks through the European Central Bank's marginal lending facility against the presentation of sufficient eligible assets. It is the equivalent of the Federal Reserve's Discount Window in the United States. The interest rate on these loans is called the marginal lending rate, and is one of the three interest rates the ECB sets every six weeks as part of its monetary policy. The two other interest rates are the deposit facility rate, the interest banks receive for depositing money with the central bank overnight, and the MRO rate, which is the cost of borrowing from the central bank for one week.

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