Discount Rate

The Discount Rate is the interest rate used in cost-benefit analysis to convert future costs and benefits of a regulation, such as those related to Anti-Money Laundering (AML) or Know Your Customer (KYC) compliance, into a single present value, thereby determining the regulation's net economic justification. This rate is critical in regulatory impact assessments (RIAs) as it reflects the opportunity cost of capital and the societal preference for present consumption over future consumption, profoundly influencing the perceived economic viability of long-term compliance mandates.