diskonto

Diskonto is a term used in several languages to denote discounting—either the act of calculating present value by applying a discount rate, or a specific rate used in banking and central banking. In modern finance, discounting is the process of translating future cash flows into their value today by applying a discount rate. The concept is central to valuation, investment appraisal, and risk assessment.

Present value is typically calculated by dividing future cash flows by a factor that grows with time, such as (1 + r)^t, where r is the discount rate and t is the time until payment. The discount rate reflects the time value of money, risk, inflation, and opportunity cost. Different contexts use different rates, such as risk-free rates for certain cash flows or risk-adjusted rates for uncertain payments.

In banking and monetary policy, diskonto can refer to the discount rate used by a central bank in its discount window, i.e., the price at which the central bank lends short-term funds to commercial banks. Changes in the discount rate influence interbank lending and monetary conditions. Historically, many central banks used a discount rate as a policy instrument before adopting other policy rates.

Commercial banking also involves discounting of bills of exchange or promissory notes. A bank may buy a bill at a discount, paying less than the face value and receiving the face value at maturity, with the difference representing the discount income.

Owing to linguistic variation, diskonto can have different nuances in different countries. In Swedish, Danish, and Norwegian financial language, it may refer to the central-bank discount rate or to the general practice of discounting future payments. In English-language contexts, discount rate or discounting is more common.