Monetary policy

What are counterparties?

The Eurosystem defines counterparties as the range of euro area financial institutions with which the European Central Bank (ECB) and the national central banks conduct monetary policy operations.

They are regulated in Guideline (EU) 2015/510 of the European Central Bank of 19 December 2014 on the implementation of the Eurosystem monetary policy frameworkOpens in a new window.

The Eurosystem endeavours to ensure as many bidding counterparties as possible, thereby stimulating free competition. To be eligible as counterparties, the financial institutions must fulfil certain general eligibility criteria; specifically, they must:

  • Be subject to the Eurosystem’s minimum reserve system. The requirement to hold minimum reserves grants an institution access to financing from the ECB and national central banks. It may therefore access monetary policy operations, including both standing facilities and open market operations, assuming the other criteria are fulfilled.
  • Be subject to at least one form of harmonised Union/European Economic Area (EEA) supervision.
  • Be financially sound.
  • Fulfil any operational requirements in the contractual or regulatory arrangements applied by their national central bank.

Moreover, as consideration, the primary requirement imposed by the ECB and the various national central banks for participation in their liquidity-providing transactions is that counterparties present sufficient assets (securities) as collateral.