Lombard Loan is a term that refers to a short-term loan secured by movable collateral (especially securities, jewelry, precious metals or rights).
Lombard loan offer:
- Banks to clients - by a Lombard loan the bank pledge a matter and provides a loan to the client, usually at 2/3 - 3/4 of the collateral (collaterals are usually appreciated by banks themselves).
- Central bank to commercial banks - to cover short-term lack of liquid funds. In this case, only securities referred to the Central Bank’s Lombard list can be used as a collateral. The central bank provides the loan for the Lombard rate.