The Banque de France is an integral part of the European System of Central Banks defined by the Maastricht Treaty. It participates in the performance of tasks and achievement of objectives assigned to this system by the Treaty. The sharing of responsibilities between the ECB and the NCBs is based upon significant decentralization of the conduct of the ESCB's single monetary policy.
The single monetary policy is an interest-rate policy, just like those previously conducted by the NCBs in the different EU Member States before Stage Three began. This policy involves the regulation of bank liquidity in euros and the steering of very short-term interest rates on the euro money market, starting with the overnight rate, the ESCB's main operational target.
To meet its objectives, the ESCB has at its disposal a set of monetary policy instruments: it conducts open market operations, offers standing facilities and requires credit institutions to hold minimum reserves on accounts with the national central banks.
This operational framework differs from the arrangements in force in France before the start of Monetary Union in the following ways:
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There are more instruments. There are two standing facilities (for official operations) and four types of open market operation executed on the basis of standard tenders, non-standard tenders or bilateral procedures. |
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There are a greater number of key rates. There are three—the rates for the two standing facilities and that for standard refinancing—instead of the two previously set by the Banque de France (the repurchase tender rate and the 5-to-10-day repurchase agreement rate). |
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The techniques used are more varied. In addition to reverse transactions (repurchase agreements and collateralized loans), which remain the main refinancing techniques, use can be made of fixed-term deposits and two new instruments, namely foreign exchange swaps (for providing or absorbing liquidity) and the issuance of debt certificates. |
Open market operations conducted at market conditions
Standing facilities
Minimum reserves
Fact Sheet No. 112 on the monetary policy of the European System of Central Banks – instruments and procedures
