Monetary policy and liquidity management The Eurosystem has clearly distinguished between its decisions determining the monetary policy stance to maintain price stability and its money market operations conducted in order to implement this stance and provide liquidity to relieve pressures in interbank money markets. Three features of the Eurosystem’s operational framework have been essential in supporting the functioning of the euro area money market.
First, a large set of counterparties has access to the Eurosystem’s refinancing operations. Second, a wide range of high-quality collateral is eligible for Eurosystem operations. Third, the operations are of sufficient size to effectively facilitate the redistribution of liquidity among banks. The Eurosystem’s operational framework has proved sufficiently flexible and effective in dealing with the money market tensions caused by the financial market turmoil.