PRESS RELEASE

The single monetary policy in Stage Three: General documentation on ESCB monetary policy instruments and procedures

23 September 1997

The European Monetary Institute (EMI) is today publishing a report entitled "The single monetary policy in Stage Three: General documentation on ESCB monetary policy instruments and procedures". The report contains a detailed description of the monetary policy instruments and procedures prepared by the EMI to be submitted to the European Central Bank (ECB) after its establishment. The report expands on, and updates, the material included in the EMI report entitled "The single monetary policy in Stage Three: Specification of the operational framework" (published on 10 January 1997).

The new report is intended particularly to provide financial institutions with the information they need to prepare themselves to participate in ESCB monetary policy operations in Stage Three of EMU. In this respect, the report first sets out the criteria to be fulfilled by financial institutions to be eligible counterparties to ESCB monetary policy operations. It then presents the features of the different types of open market operations which might be conducted by the ESCB (the main refinancing operations, the longer-term refinancing operations, fine-tuning operations, and structural operations) and of the ESCB's two standing facilities (the marginal lending facility and the deposit facility). The report contains a detailed description of the procedures related to the various types of operations. Furthermore, the report specifies the eligibility criteria and risk control measures to be applied to assets underlying the ESCB's liquidity-providing operations. Finally, the report presents the features of the ESCB's minimum reserves system as prepared by the EMI.

In relation to the EMI report of January 1997, the present report includes further specification particularly in the following areas: · tender and settlement procedures, as well as procedures for bilateral transactions, to be applied in the ESCB's open market operations; · procedures for counterparties' access to the standing facilities and for settling transactions under the standing facilities; · eligibility criteria, risk control measures and valuation principles to be applied to assets underlying the ESCB's liquidity-providing operations; · features of the ESCB's minimum reserves system; · provisions to be applied in the transition from the national monetary policies in Stage Two to the single monetary policy in Stage Three.

It should be noted that the final decision on the operational framework for the single monetary policy will be taken by the Governing Council of the ECB after its establishment. The Governing Council of the ECB may decide not to use all the available options or may change certain features of the instruments and procedures presented in the report.

The report will be distributed by each of the EU central banks to interested parties in their respective countries. It will also be available from the EMI, at the following address:

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