Operational Standing Facilities
From ACT Wiki
Bank of England.
(OSF).
The Bank of England's Operational Standing Facilities (OSF) are part of its Sterling Monetary Framework (SMF).
The OSFs are the:
- Operational Standing Lending Facility.
- Operational Standing Deposit Facility.
The facilities are overnight and on demand, at predetermined fixed interest rates.
As part of the SMF, the OSFs' purposes are to:
- Provide a mechanism to bring about a close alignment of money market rates and the Official Bank Rate.
- Provide a means for banks and other SMF participants to manage any temporary liquidity shortages arising from technical problems in their internal payments and settlement systems, or in the market-wide payments and settlements infrastructure.
Such temporary liquidity shortages are sometimes known as 'frictional' payment shocks.
