Monetary policy

Open market operations procedures: tenders and bilateral procedures.

Open market operations can be executed through two types of procedures: tenders and bilateral procedures.

Tenders are allotment procedures in which monetary policy counterparties submit their bids to the national central banks (NCBs) after the tender announcement. The NCBs, in turn, compile the bids submitted in their jurisdictions and send them to the European Central Bank (ECB). After receiving all the bids, the ECB orders them and rejects all those below the minimum price (or interest rate) at which it is prepared to accept them.[Q31]  This procedure is known as a variable rate tender, in contrast to fixed rate tenders, in which there is a single price. Since 2008, the ECB has conducted fixed rate tenders with full allotment to avoid uncertainty among institutions as to the availability of funds.

There are two types of tender, depending on their time frame. Standard tenders are announced, allocated and settled within 24 hours, while quick tenders are executed within a period of 105 minutes.

Bilateral procedures are those in which the ECB conducts transactions directly with one or more counterparties. They also include transactions conducted through stock exchanges or market agents.