Monetary policy instruments

Through the standard monetary policy instruments the Eurosystem targets neutral liquidity (providing banks with as much liquidity as they need for their current requirements), while through the non-standard operations it tries to meet its additional objectives (e.g. reducing uncertainty, lowering the level of long-term interest rates, encouraging lending).

Eurosystem monetary policy instruments are provided under the same conditions in all euro area countries. The legal basis for their implementation are the ECB’s guidelines and decisions on monetary policy implementation, which are published on the ECB website. Banks generally access the instruments on a decentralised basis at the national central banks.

The monetary policy instruments are open market operations, standing facilities and minimum reserves. In addition, since 2009 the Eurosistem has implemented also asset purchase programmes (for more, see Non-standard measures). Eurosystem monetary policy is designed in principle to ensure that a broad range of banks (counterparties) participate in the instruments. Banks that are subject to maintain minimum reserves may access the standing facilities and open market operations, while the Eurosystem also carries out its asset purchases through other market participants. In certain cases the Eurosystem may also select a limited number of counterparties. 

The Eurosystem monetary policy instruments are as follows:

  • open market operations,
  • standing facilities,
  • minimum reserves.

For banks to be able to access the monetary policy instruments, they must be subject to the minimum reserve requirements (in accordance with Article 19.1 of the Statute of the ESCB and the ECB), must be financially sound, and must be subject to an appropriate form of supervision.