On 13 March 2024, the ECB Governing Council decided on changes to the operational framework for implementing monetary policy. These changes will affect how central bank liquidity will be provided as excess liquidity in the banking system, while remaining significant over the coming years, gradually declines. The review was announced back in December 2022 to ensure that the operational framework remains appropriate as the Eurosystem balance sheet normalises. Amongst other things, the ECB Governing Council decided to preserve some key aspects of the current de facto operational framework. This includes continuing to steer the monetary policy stance through the deposit facility rate. Money market interest rates are expected to evolve in the vicinity of the deposit facility rate. Some volatility in short-term money market rates can be tolerated as long as it does not blur the signal about the intended monetary policy stance. In addition, the weekly main refinancing operations and three-month operations will continue to be conducted as fixed rate tender procedures with full allotment. At the same time, changes were made that distinguish the new framework from the one that came before. After a period of high excess liquidity stemming primarily from non-standard monetary policy measures (e.g. APP and PEPP), liquidity will be provided largely through refinancing operations conducted as fixed rate tender procedures with full allotment. In addition, to incentivise bidding in the weekly operations, the spread between the main refinancing operations rate and the deposit facility rate was reduced from 50 basis points to 15 basis points in September 2024. Furthermore, part of the liquidity needs arising from autonomous factors and the minimum reserve may be covered by structural operations, such as structural refinancing operations or a structural portfolio of securities. Structural operations serve exclusively to provide liquidity and are not intended to provide any additional monetary policy stimulus.

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