Open market operations play an important role in steering interest rates, managing the liquidity situation in the market and signaling the monetary policy stance. Open market operations are initiated by the ECB, which decides on the instrument and on the terms and conditions, and implemented in a decentralised manner by the national central banks of the euro area.
Different types of instruments are available to the Eurosystem. 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.
It is possible to execute open market operations on the basis of standard tenders, quick tenders or bilateral procedures. Open market operations can differ in terms of aim, regularity and procedure.
