Open market operations

Open market operations play an important role in steering interest rates by injecting or absorbing liquidity in the financial system, and are conducted at the initiative of the ECB.

Five types of tools, or instruments, are available to the Eurosystem when carrying out open market operations. The most important instrument is reverse transactions, which are applicable on the basis of repurchase agreements or collateralised loans. The Eurosystem may also make use of outright transactions, issuance of debt certificates, foreign exchange swaps and collection of fixed-term deposits.

There are four main types of open market operations:

Main refinancing operations

Main refinancing operations (MRO) are regular liquidity-providing reverse transactions generally with a frequency and maturity of one week. They are executed by NCBs on the basis of standard tenders, according to a pre-specified calendar. The MRO plays a pivotal role in fulfilling the aims of the Eurosystem's open market operations.

Longer-term refinancing operations

Longer-term refinancing operations (LTRO) are liquidity-providing reverse transactions and normally have a maturity of three months. They are executed by NCBs on the basis of standard tenders, according to a pre-specified calendar. LTROs aim to provide counterparties with additional longer-term refinancing. As a rule, the Eurosystem does not send interest rate signals to the market by means of these operations.

Indicative calendar for the Eurosystem’s regular tender operations

In recent years, the regular LTROs have been complemented by non-standard LTROs, which vary in design and duration. These non-regular open market operations have had maturities of up to 48 months, include very long-term refinancing operations (VLTROs) and targeted longer-term refinancing operations (TLTROs). Such longer-term programmes are aimed at providing eligible counterparties with additional longer-term refinancing and can also serve other monetary policy objectives.

Fine-tuning operations

Fine-tuning operations can be executed on an ad hoc basis to manage the liquidity situation in the market and to steer short-term 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 foreign exchange swaps or the collection of fixed-term deposits. They will normally be executed through quick tenders and a limited number of eligible counterparties may be selected to participate.

Structural operations

Structural operations can be carried out by the Eurosystem through reverse transactions, outright transactions, and the issuance of debt certificates. These operations are executed whenever the ECB wishes to adjust the structural position of the financial sector vis-à-vis Eurosystem (on a regular or non-regular basis). Structural operations in the form of reverse transactions and the issuance of debt instruments are carried out by the Eurosystem through standard tenders. Structural operations in the form of outright transactions are normally executed through bilateral procedures. In March 2024, the Governing Council of the ECB decided that new structural LTROs and a structural portfolio of securities will be introduced once the Eurosystem balance sheet begins to grow durably again, taking into account legacy bond holdings. These operations will make a substantial contribution to covering the banking sector’s structural liquidity needs arising from autonomous factors and minimum reserve requirements. The structural refinancing operations and the structural portfolio of securities will be calibrated in accordance with a set of principles agreed by the Governing Council and to avoid interference with the monetary policy stance.

More information and rates

More information and interest rates applicable to operations is available on the ECB website.