To achieve its primary objective of maintaining price stability, the Eurosystem has at its disposal a set of monetary policy instruments.
Open market operations represent the most important instrument. They serve
They can be divided into the following four categories:
The Eurosystem also offers standing facilities which provide and absorb overnight liquidity. Their interest rates normally provide a ceiling and a floor for the overnight rate in the money market.
Two standing facilities are available:
Finally, the Eurosystem requires credit institutions to hold minimum reserves on accounts with the national central banks. The purpose of the minimum reserve system is to stabilise money market interest rates and create (or enlarge) a structural liquidity shortage.
MP.009 01/12European Central Bank