Monetary Policy Instruments of the Eurosystem
To achieve its primary goal of maintaining price stability in the euro area, the Eurosystem aims at steering short-term money market rates. The EONIA1, the reference rate in the interbank market for overnight loans, is the Eurosystem’s operating target. For steering the short-term interest rates, the Eurosystem has at its disposal a set of monetary policy instruments. These instruments are part of the Eurosystem’s operational framework which comprises all of the instruments and procedures used to implement the single monetary policy in the euro area (European Central Bank, 2004c, p. 71). While designing this operational framework, a set of principles has had to be considered. We will briefly present these principles in the next section.
KeywordsMonetary Policy Euro Area Banking Sector European Central Maintenance Period
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