Banks refinancing with the central bank: Re-examination of its interest rate elasticities for Belgium 1960–1973

This paper reports evidence that bank refinancing with the central bank is highly interest elastic, particularly with respect to the discount rate. It shows that banks fully adjust actual to desired refinancing within three months and that the apparent negative association of refinancing with a need variable is a spurious one. Discount rate changes are found to be largely effective as a policy instrument.