Definition of Lombard rate:
Historically, the Lombard rate was associated with the banking houses of Italy's Lombardy region, who were famous for their pledged collateral loans. Some sources tie the term's history to the Bardi banking family, which started in Lombardy and built the Compagnia dei Bardi banking house. This family also operated a Paris office known as the Maison de Lombard, which specialized in pledged collateral loans. These loans became popular throughout Europe, causing the Lombard rate to become a common term among the continent's banking community.
The Lombard rate is the interest rate charged by central banks when extending short-term loans to commercial banks. Traditionally, it refers to loans that are backed by specific collateral. The term originates from the Lombardy region of Italy, which has a rich history of banking houses dating back to the Middle Ages. Today, it is mainly associated with the Bundesbank, the central bank of Germany.
The interest rate charged by the central bank of Germany for loans on a collateralized security.
How to use Lombard rate in a sentence?
- It originates in the Middle Ages from the activities of Italian banking houses.
- The Lombard rate is the central bank interest rate used for short-term collateralized loans to central banks.
- Today, the term is less common, but it is still occasionally used in European and international banking contexts.
Meaning of Lombard rate & Lombard rate Definition