ECB interest rates explained - ECB rate equivalent to FED rate

Hi, what is the difference between 3 ECB interest rates ? How they can be explained ? Which one is an equivalent on FED funds rate ?
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25 Mar 2023 at 04:41 PM
Eurozone banking system is a bit different than US banking system. Because of that is difficult to compare ECB rates to FED funds rate.

ECB has 3 key interest rates:

  • Main refinancing operations - provides the bulk of liquidity to the banking system. When liquidity is needed, a bank can borrow directly from ECB. Main refinancing operations rate is the interest rate banks pay when they borrow money from the ECB for one week.
  • Deposit facility - is the intetest rate, which banks may use to make overnight deposits with the Eurosystem.
  • Marginal lending facility - is the rate, which offers overnight credit to banks from the Eurosystem.


FED funds rate - is the interest rate at which commercial banks and other depository institutions borrow and lend their excess reserves (funds held at Federal Reserve Banks) to each other overnight.
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31 Mar 2023 at 11:57 AM
Ben
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