Collateral

Definition and stakes

Portrait of Walter Bagehot Walter Bagehot,  Lombard Street: A Description of the Money Market

“ The present lender to the bill-broker at first always used to discount a bill, which is as much as saying that he was always a lender at interest. When he came to take the guarantee of the broker, and only to look at the bills as a collateral security, naturally he did not forego his interest: still less did he forego it when he ceased to take security at all. The bill-broker has, in one shape or other, to pay interest on every sixpence left with him, and that constant habit of giving interest has this grave consequence: the bill-broker cannot afford to keep much money unemployed. ”
Source: Gutenberg

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