Commercial Paper

Often abbreviated to CP.
these are unsecured loans from an investor to a corporation. borrowing by publicly owned corporates
Commercial companies can borrow in the wholesale markets and offer security called "commercial paper".
It is just another promise to pay back.
Central banks have to agree, as this is a deposit taking activity and must be controlled.
There will be rules on which companies can or cannot borrow using commercial paper.
For example in the UK companies must hae a certain balance sheet capital and be publicly quoted on the stock exchange.
Commerical paper issues are just another way of borrowing money and may provide an alternative to borrowing from the bank.



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