Standing facilities

Standing facilities are aimed at providing and absorbing overnight liquidity, signal the general monetary policy stance and bound overnight market interest rates. Two standing facilities are available to eligible counterparties on their own initiative and administered in a decentralised manner by the NCBs.

(1) Counterparties can use the marginal lending facility (MLF) to obtain overnight liquidity from the NCBs 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 normally provides a ceiling for the overnight market interest rate.

(2) Counterparties can use the deposit facility (DF) to make overnight deposits with the NCBs. Under normal circumstances, there are no deposit limits or other restrictions on counterparties’ access to the facility. The interest rate on the deposit facility normally provides a floor for the overnight market interest rate.