//

The financial encyclopedia uses cookies to improve your user experience. Find out more here!



 

 


 

'Back door'
 

 

When the discount houses are short of-funds they can, as a last resort, go to the Bank of England and seil their holdings of treasury bills at the discount or bank rate. This is a 'front door' operation. However, when bank rate is very high and the discount houses are in temporary difficulties the government broker may buy bills from them at the market rate to ease the pressure on their liquidity. This operation is called 'back door'.

Reference: The Penguin Business Dictionary, 3rd edt.