In economics, credit is the postponement agreed on by the parties of the payment of a debt to a future day. It implies confidence of the creditor in the debtor; and a credit system is one of general confidence of people in each other's honesty, solvency, and resources. By means of a credit system a comparatively small stock of money can be made to do duty for carrying on a number of different transactions; but it is indispensable for every good system of credit that money must be instantly available when required, and this principle applies to every species of transaction where postponed payment is concerned.
Public credit is the confidence which people have in the ability and disposition of a nation to make good its engagements with its creditors; or the estimation in which individuals hold the public promises of payment, whether such promises are expressed or implied. The term is also applied to the general credit of individuals in a nation; when merchants and others are wealthy and punctual in fulfilling engagements; or when they transact business with honour and fidelity; or when transfers of property are made with ease. So we speak of the credit of a bank when general confidence is placed in its ability to redeem its notes, and the credit of a mercantile house rests on its supposed ability and probity, which induce men to trust to its engagements. When the public credit is questionable it raises the premium on loans. Research Credit
Abbreviations
Money
Research Credit