Refinancing (recourse to central bank)

Generally, the procurement of liquidity to make up for a cash outflow now or later. – The repayment of a loan by taking out a new loan, usually of the same size and using the same asset as collateral, but under new terms (paying off an existing loan with the proceeds from a new loan, usually of the same size, and using the same asset as collateral, but under new terms). – Central bank money obtained by the bank from the central bank on credit terms. – While an individual bank can also obtain liquidity on the (interbank) money market, the banking system as a whole needs to obtain funding from the central bank via its facilities. – See Liquidity management. – Cf. Deutsche Bundesbank Monthly Report of September 2008, p. 61 (refinancing sources of German banks, 1990 to 2007), ECB Monthly Report of November 2011, pp. 81 et seq. (detailed, textbook presentation of banks’ refinancing channels), ECB Monthly Report of December 2012, pp. 27 ff. (refinancing conditions of banks and companies since 2007; many overviews; effects of the sovereign debt crisis), ECB Monthly Bulletin of January 2014, p. 75 ff. (detailed account of the ECB’s refinancing policy).

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