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Permanent Facilities

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Permanent facilities constitute one of the instruments of the monetary policy of the Eurosystem. By which, it's intended to inject or drain liquidity to a day directly through credit and deposit operations carried out by the Eurosystem with authorized entities, at the initiative of the latter.

These facilities are permanently available to financial entities obliged to meet the minimum reserve ratio.

They are usually used rarely since their use usually results in some calculation error, some unexpected income or some error in the imputation of some operation.

Types of permanent facilities

These entities can resort to two permanent facilities:

- Marginal credit facility: -situated in the asset- is that we use when we need an additional amount to which our balance is thrown in order to meet 1% of the cash ratio (in the middle of the period). As with all Central Bank loans, this operation can only be carried out if the entity that uses the facility has guarantees to perform it. The ECB will pay the amount demanded and guaranteed in your account so that you can adequately cover the coefficient (normally used as a guarantee of low liquid assets pledged in the Central Banks so that they can be used in special cases).
- Ease of deposit: -located in the liability- is one in which the financial entity that must cover the minimum reserve ratio has a liquidity surplus. Unlike the credit facility, the ECB shouldn't provide guarantees to the lender.

Its main objectives are to inject and drain liquidity at one day, point out the general orientation of the monetary policy and control the market interest rates at one day.


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