An alternative approach to central bank intervention, other than a corridor system or a floor system, is a system in which the central bank sets a lending rate (the Bank rate in the case of Canada) to financial institutions, and then supplies loans elastically at that interest rate to whichever financial institutions want to borrow. Let R be the central bank's lending rate. Under this system, the excess demand for loans curve (with excess loan demand on the horizontal axis and the overnight interest rate on the vertical axis)

with excess demand greater than 0. with excess demand less than 0. with excess demand equal to 0. at an interest rate above RI. at an interest rate below RI- at the interest rate RI- from left to right decreases and eventually becomes perfectly elastic is entirely perfectly elastic from right to left increases and eventually becomes perfectly inelastic is entirely perfectly inelastic from right to left increases and eventually becomes perfectly elastic from left to right decreases and eventually becomes perfectly inelastic