The Operational Standing Facilities (OSFs) have two roles. The first is to provide an arbitrage in normal market conditions to prevent money market rates moving far away from Bank Rate. So they are a vital part of implementing the Bank's monetary policy. The second role is to provide a means for participating banks to manage unexpected (frictional) payment shocks which may arise due to technical problems in the bank's own systems or in the market-wide payments and settlement infrastructure.
The Bank seeks to satisfy itself that use of the facility is consistent with these purposes. The rates currently paid/charged on the facilities are shown below:
|Operational Standing Lending Facility
|Operational Standing Deposit Facility
The operational standing deposit facility is uncollateralised. The operational standing lending facility is for overnight reverse repo against Narrow Collateral (65k).
The operational standing facilities are available all day subject to operational constraints arising from deadlines in payments and securities settlement systems.
The operation of Operational Standing Facilities is set out in more detail in the Red Book:
The main SMF Documentation sets out how these operations work. Its provisions may be amended by the Bank from time to time by Market Notices.
Click Read more to see the superseeded Market Notices
Information for participants