Central banks have regularly pumped cash into money markets since the financial crisis deteriorated in mid September, raising the question of what terms like "liquidity" and "refinancing" mean.
The explanation begins at an imaginary ABC bank where Smith has gotten a credit of $27,000 dollars to buy a car.
The bank has credited Smith's account and must support the loan with a cash reserve at the country's central bank in case it is not paid back.
In the 15-nation eurozone, banks must put two per cent of a loan's value on deposit with the European Central Bank (ECB), in funds known as "central bank money," Bank of America economist Gilles Moec explained.
Deposits also allow banks to buy the bank notes they distribute to clients, he added.
The system of minimum reserves provides a safety net and allows central bankers to keep an eye on lending.
It is possible for ABC bank to find itself short of the cash needed to stock its reserve, if for example it has made many loans in a short period of time.
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Normally, ABC would go to an interbank money market and borrow central bank money from another bank.
ABC bank has thus "refinanced" its central bank account, by obtaining "liquidities," or cash, from a bank that is often called a counterpart.
Exchanges on the interbank money market take place at rates that vary according to supply and demand and exist only as figures on paper, actual bank notes are not involved.
On a weekly basis, meanwhile, central banks carry out refinancing operations during which they loan cash to banks that need it, at what is called the reference rate, currently 3.75 per cent in the eurozone.