Open market operations

OPEN MARKET OPERATIONS

TYPE OF INSTRUMENT The Eurosystem may invite counterparties to place remunerated fixed term deposits with the national central bank in the Member State in which the counterparty is established .

3 Open market operations the asset is transferred to the creditor , while the parties agree to reverse the transaction through a re transfer of the asset to the debtor at a future point in time ) or as collateralised loans ( i.e. an enforceable security interest is provided over the assets but , assuming fulfilment of the debt obligation , the ownership of the asset is retained by the debtor ) .

Open market operations 1.3.2 .

For open market operations .

The time of settlement of the main and the longer term refinancing operations normally coincides with the time of reimbursement of a previous operation of corresponding maturity .

Settlement of open market operations

The operational features of the main refinancing operations can be summarised as follows they are liquidity providing operations

For open market operations .

The operational features of the main refinancing operations can be summarised as follows they are operations

Settlement of open market operations 5.3.3 .

Four categories of open market operations

CHAPTER 3 Open market operations 3.1 .

Open market operations and standing facilities

13 CHAPTER 3 OPEN MARKET OPERATIONS Open market operations play an important role in the Eurosystem 's monetary policy .

Open market operations Main refinancing operations Longer term refinancing operations Fine tuning operations

Further provisions for reverse transactions based on repurchase agreements are specified in the contractual arrangements applied by the respective national central bank ( or the ECB ) .

Open market operations Main refinancing operations Longer term refinancing operations Fine tuning operations

Open market operations Main refinancing operations Longer term refinancing operations Fine tuning operations Reverse transactions Reverse transactions One week Three months Weekly Monthly Standard tenders Standard tenders

Box 4.2 Types of open market transactions Reverse transactions are the main open market instrument of the Eurosystem and can be used for all kinds of liquidity providing open market operations .

2000X0776 EN 01.03.2010 007.001 17 M5 CHAPTER 3 OPEN MARKET OPERATIONS Open market operations play an important role in the Eurosystem 's monetary policy .

Overview of the monetary policy framework Open market operations Main refinancing Reverse transactions operations Longer term refinancing operations Fine tuning operations Reverse transactions

The most important group of operations is open market operations .

Open market operations can be divided into the following four categories

Official Journal of the European Union CHAPTER 3 OPEN MARKET OPERATIONS

Open market operations

1.4 Other open market operations In 2000 the Eurosystem carried out two finetuning operations .

and ( c ) payments in relation to Eurosystem open market operations .

Lending through open market operations normally takes place in the form of reverse transactions .

The majority of the Eurosystem 's open market operations consist of reverse transactions against eligible collateral .

Open market operations Main refinancing operations Longer term refinancing operations Fine tuning operations Reverse transactions Reverse transactions Two weeks Weekly Standard tenders

Open market operations 3

1.5 Standing facilities The width of the interest rate corridor determined by the two standing facilities remained unchanged at 200 basis points in 2001 .

As a consequence , the outstanding volume of refinancing operations was driven not by the supply considerations of the Eurosystem , but rather by demand from counterparties , reflecting their underlying liquidity preferences .

Simplicity and transparency ensure that the intentions behind monetary policy operations are correctly understood .

Open market operations Reverse transactions 13 13 13 13 14 14 15 15 16 17 18

The most important instrument are the open market operations . They serve

Open market operations Main refinancing operations Longer term refinancing operations Fine tuning operations Reverse transactions Reverse transactions Reverse transactions Foreign exchange swaps One week Three months Weekly Monthly Standard tenders Standard tenders

Open market operations Main refinancing operations Longer term refinancing operations Fine tuning operations Reverse transactions Reverse transactions One week Three months Weekly Monthly Standard tenders Standard tenders

Among these criteria are the requirements that it must be denominated in euro , be issued ( or guaranteed ) by entities located in EEA countries , and be located in a national central bank or CSD of the euro area .

Open market operations Main refinancing operations Longer term refinancing operations Fine tuning operations Reverse transactions Reverse transactions One week Weekly Standard tenders

Liquidity providing OPEN MARKET OPERATIONS Main refinancing operations Longer term refinancing operations Fine tuning operations Reverse transactions Reverse transactions Reverse transactions Foreign exchange swaps Liquidity absorbing

and participate in Eurosystem open market operations that are based on standard tenders .

Eurosystem open market operations and standing facilities Types of transactions1 ) Maturity Frequency