In comparison, the rate on our refinancing operations at which we provide liquidity has effectively turned into a penalty rate –not to mention the rate charged by national central banks when they provide emergency liquidity assistance to distressed banks which is set even higher, above our marginal lending rate. ECB liquidity is also only available against collateral.
Our collateral policy has evolved in the crisis but strict valuation and haircuts rules are always applied. Last but not least, our liquidity is only available to banks, subject to micro-prudential supervision. Prudential checks by national supervisors (and looking forward, by the future prudential arm of the ECB) ensure that liquidity only flows to fundamentally solvent institutions. The OMTs also provide partial insurance.