1. The discount houses have no option but to repay.

2. The preference is, however, for the discount houses.

3. The discount houses borrow funds from commercial banks, accepting houses, overseas and other banks and from industrial and commercial companies.

4. Individual banks and discount houses can alleviate liquidity shortages through these markets without the Bank having an opportunity to influence rates.

5. Bank Rate was the rate at which discount houses could borrow from the Bank in order to meet any shortage of liquidity.

6. Open market operations are made via the discount houses,() but can also be conducted directly with the major clearing banks.

7. The discount houses attempt to make profits by creating a market in short-term financial instruments.

8. They only buy them from discount houses, and then only after the bills are a few weeks old.

9. Thus, the discount houses may be making losses on the loans they are repaying to the commercial banks.

10. But then the discount houses in turn may be short of liquid assets to meet this demand.

11. As we have seen above, discount houses and other members of the monetary sector have substantial short-term funds lent to each other.

11. try its best to collect and make good sentences.

12. The effect of this, of course, is to shift the shortage of liquidity to other institutions, here the discount houses.

13. The market developed in the 1960s, involving firstly overseas banks, later merchant banks and discount houses.

14. In addition there are pension funds, insurance companies, large companies, finance houses, discount houses.

15. As the volume of Treasury bills declined in the 1970s the discount houses facilitated the rapid growth in the commercial bill market.

16. Discount houses have borrowing facilities at the Bank, with limits related to the capital base of each discount house.

17. The Bank can choose what rate of interest or rediscount to charge the discount houses.

18. As we have seen, if banks are short of cash they can call in loans from the discount houses.

19. Now the price has fallen and future purchases by discount houses will be at the new, lower rate.

20. However, the shortage of liquidity is transferred to the discount houses and the discount market.

21. Why buy a toaster for $40 when you can buy the same toaster for $20 dollars at a discount house?