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Counterparties to the Eurosystem monetary policy

Counterparties to the Eurosystem monetary policy operations must fulfil certain eligibility criteria. These criteria are uniform and have been designed to:

  • offer to a broad range of institutions access to the monetary policy operations,
  • ensure equal treatment of institutions across the euro area.
  • be subject to the Eurosystem's minimum reserve system.
  • be financially sound and thus be subject to at least one form of EU/EEA harmonized supervision.
  • fulfil certain operational criteria.

Credit institutions fulfilling the above-cited criteria, have, in general, access to the Eurosystem standing facilities and participate in the regular Eurosystem's open market operations. The Eurosystem has limited the range of counterparties for fine-tuning operations on the basis of different criteria, such as their activity in the money market, the efficiency of their trading desk, etc.

There are two standing facilities available to eligible counterparties on their own initiative: the Marginal Lending Facility and the Deposit Facility. They aim at limiting excessive movements of market Overnight (O/N) rates by providing (Marginal Lending Facility) or absorbing liquidity (Deposit Facility) and to signal the stance of monetary policy.

Marginal Lending Facility
Counterparties may use marginal lending facility to obtain liquidity from national central banks at a pre-specified interest rate against eligible assets. Under normal conditions, the interest rate on the facility provides a ceiling for the overnight market interest rate.
Deposit Facility
Counterparties can use the deposit facility to make overnight deposits with national central banks. The deposits are remunerated at a pre-specified interest rate. Under normal circumstances, the interest rate on the facility provides a floor for the overnight market interest rate. No collateral is given to the counterparty in exchange fore the deposits. 



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