Role of Central Bank in the Economy

The primary objective of the ECBs monetary policy is to maintain price stability. The ECB aims at
inflation rates of below, but close to, 2% over the medium term.The operational framework of the
Eurosystem consists of the following set of instruments:

Open market operations
Open market operations play an important role in steering interest rates, managing the liquidity
situation in the market and signalling the monetary policy stance.
Standing facilities
Standing facilities aim to provide and absorb overnight liquidity, signal the general monetary policy
stance and bound overnight market interest rates. Two standing facilities, which are administered in
a decentralised manner by the NCBs, are available to eligible counterparties on their own initiative.
Minimum reserve requirements
The intent of the minimum reserve system is to pursue the aims of stabilising money market
interest rates, creating (or enlarging) a structural liquidity shortage and possibly contributing to the
control of monetary expansion.