Standing facilities are aimed at providing and absorbing overnight liquidity, signal the general stance of monetary policy and bound overnight market interest rates. Two standing facilities are available to eligible counterparties on their own initiative, subject to their fulfilment 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 set by the ECB 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 deposit facility set by the ECB normally provides a floor for the overnight market interest rate. The standing facilities are administered in a decentralised manner by the national central banks.
For more details, see the relevant chapter in the document entitled “The implementation of monetary policy in the euro area” or the ECB webpage.