General features
Standing facilities allow credit institutions to offset any liquidity imbalances at the end of the business day by making overnight deposits with the central bank (deposit facility - DF) or by borrowing funds from the central bank to obtain overnight liquidity (marginal lending facility - MLF).
The interest rates applied to these facilities normally constitute the lower bound (deposit facility rate) and the higher bound (marginal lending facility rate) for the overnight interest rate at which banks exchange funds, creating what is known as the monetary policy 'corridor'.
The ECB's Governing Council steers the monetary policy stance through the deposit facility rate, as confirmed in March 2024 by the outcome of the review of the Eurosystem's operational framework. It expects short-term money market interest rates to evolve in the vicinity of the DFR with tolerance for some volatility as long as it does not blur the signal about the intended monetary policy stance.
Operational communications
The contracts and operational instructions for participation in the standing facilities with the Bank of Italy are available at the bottom of the section 'The implementation of monetary policy and emergency liquidity assistance', under the heading 'Monetary policy instruments - Contracts and Operating guides', at the following links: 'Contracts' ('Contratto quadro per operazioni su iniziativa delle controparti', only in Italian) and 'Operating guides' (only in Italian).
The operations are managed by the Bank of Italy in accordance with the harmonized terms and conditions for the entire euro area. The time limits for accessing the standing facilities are defined by the TARGET system.
