This meant we could stop draining liquidity, unwind those operations and let banks hold extra cash instead, on which they could earn the policy rate. The logic of this system is that abundant liquidity puts downward pressure on rates.
But the deposit facility forms a floor: it is not attractive to lend to anyone else, or buy assets, with an inferior return to what the SARB offers. For this reason, these frameworks are often called floor systems. For our MPIF, we adopted a version of a floor system called a tiered floor, which had been pioneered in New Zealand and Norway.