ECB Marginal Lending Facility Rate Decision

With the marginal lending facility, the respective central banks provide overnight liquidity for eligible assets to the national banks that fulfill certain eligibility criteria at national and EU level. Eligible assets are marketable debt instruments and assets that are of particular relevance to national financial markets and banking systems and for which certain eligibility criteria exist, according to ECB criteria.

Banks can either transfer the assets for the time they are owned by the central bank in exchange for money, which is then re-transferred, or receive the money in the form of collateralized overnight credit. The maturity is therefore always one business day.

The interest to be paid is based on the rate set in advance by the ECB, which is set every six weeks. The ECB may also change or even suspend access at any time in accordance with the objectives pursued and its general monetary policy considerations.

The ECB also provides two other liquidity management instruments for banks and sets the interest rates to be applied: the main refinancing operations, i. e. the ECB’s one-week loans to banks, and the deposit facility, i. e. money that banks can deposit overnight with the ECB.

It is generally assumed that lowering the interest rate will stimulate the economy and the EUR.