The Eurosystem’s standing facilities – one facility providing and one absorbing overnight liquidity – signal the general stance of monetary policy and bound overnight market interest rates. Eligible counterparties may use the two standing facilities on their own initiative, subject to their fulfillment of certain operational access conditions:
- Counterparties can use the marginal lending facility to obtain overnight liquidity from the national central banks against eligible assets. Under normal circumstances, there are no credit limits or other restrictions on counterparties’ access to the facility apart from the requirement to present sufficient underlying assets. The interest rate on the marginal lending facility normally provides a ceiling for the overnight market interest rate.
- Counterparties can use the deposit facility to make overnight deposits with the national central banks. Under normal circumstances, there are no deposit limits or other restrictions on counterparties’ access to the facility. The interest rate on the facility normally provides a floor for the overnight market interest rate. The standing facilities are administered in a decentralized manner by the national central banks.