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Four types of open market operations

Open market operations can differ in terms of aim, regularity and procedure.

1. Main refinancing operations

are regular liquidity-providing reverse transactions with a frequency and maturity of one week. They are executed by the NCBs on the basis of standard tenders and according to a pre-specified calendar. The main refinancing operations play a pivotal role in fulfilling the aims of the Eurosystem's open market operations and normally provide the bulk of refinancing to the financial sector.

2. Longer-term refinancing operations

are liquidity-providing reverse transactions that are regularly conducted with a monthly frequency and a maturity of three months. Longer-term refinancing operations that are conducted at irregular intervals or with other maturities, e.g. the length of one maintenance period, six months or twelve months are also possible. They are executed by the NCBs on the basis of standard tenders and according to a pre-specified calendar.

These operations aim to provide counterparties with additional longer-term refinancing. As a rule, the Eurosystem does not intend to send signals to the market by means of these operations and therefore normally acts as a rate taker. On some occasions and under exceptional market circumstances the ECB also conducts longer-term refinancing operations at a fixed rate (i.e. the Eurosystem does not act as a rate taker).

3. Fine-tuning operations

can be executed on an ad hoc basis to manage the liquidity situation in the market and to steer interest rates. In particular, they aim to smooth the effects on interest rates caused by unexpected liquidity fluctuations. Fine-tuning operations are primarily executed as reverse transactions, but may also take the form of outright transactions, foreign exchange swaps and collection of fixed-term deposits.

The instruments and procedures applied when conducting fine-tuning operations will be adapted to the types of transactions and the specific objectives pursued in performing the operations. Fine-tuning operations will normally be executed by the NCBs through quick tenders or bilateral procedures. The Eurosystem may select a limited number of counterparties to participate in fine-tuning operations.

4. Structural operations

can be carried out by the Eurosystem through reverse transactions, outright transactions and issuance of debt certificates. These operations will be executed whenever the ECB wishes to adjust the structural position of the Eurosystem vis-à-vis the financial sector (on a regular or non-regular basis). Structural operations in the form of reverse transactions and issuance of debt instruments will be carried out by the NCBs through standard tenders. Structural operations in the form of outright transactions will be executed through bilateral procedures.