Inhaltsverzeichnis
What is the Facility?
In financial terms, a facility is an Anglicism that stands for the limited possibility of taking out loans or investing credit.
The word facility is borrowed from Facility, which the IMF (International Monetary Fund) first used in October 1952 for short-term loans to its member states. In concrete terms, these are so-called stand-by agreements. According to Article XXX(b) of the IMF Arrangement, standby liquidity is the right of an IWS Member State to access a specific amount of credit following the decision of the IWS. Strictly speaking, it is a drawing right that exceeds the quota that the member state is actually entitled to.
Stand-by arrangements are an IMF credit instrument that allows an IMF member state to call on foreign exchange up to a certain ceiling in the event of balance of payments difficulties.
IMF
Further facilities have been established by the IMF over time. An additional “regular facility” is the “Enhanced IMF Facility”, which has been used since 1974 to address structural imbalances in the balance of payments. In addition to the regular IMF facilities, since 1987 there has also been so-called “concessionary assistance” through a facility to compensate for loss of export earnings, the system transformation facility, the growth and poverty reduction facility and special facilities such as the facility to strengthen currency reserves or the precautionary credit line.
Revolving Credit Facility
The term “facility” was finally adopted from international lending, where there is the stand-by facility, the revolving credit facility, the transferable loan facilities or the roll-over credit facility. In the German banking sector However, with regard to lending business with non-banks, the credit line is increasingly gaining acceptance as an alternative term, where it is used as a synonym for overdraft facilities, current account loans, securities collateral loans or Lombard loans.
In this context, credit commitments that are not fully or partially utilised are also referred to as credit lines. In capital requirements regulation, the terms credit line or facility (pursuant to Art. 166 Para. 8a, Art. 265 Para. 3 CRR) are used alternately.
ESCB
The Statute of the ESCB provides for so-called ‘standing facilities’. In the ESCB, this also includes the deposit facility and the marginal lending facility. These facilities are available to commercial banks on a permanent basis and can therefore also be used if required. Standing facilities’ are used to provide or absorb overnight liquidity. The interest rates of the “standing facilities” create an interest rate corridor within which the overnight money rate on the money market moves. As key interest rates, they signal the general course of monetary policy. The management of the standing facilities is decentralised to the national central banks.
Article 21.1 of the ESCB Treaty prohibits overdraft facilities or other credit facilities of the ESCB or the ECB vis-à-vis EU Member States, public undertakings or local authorities.
liquidity
Excess liquidity may be invested by commercial banks as demand deposits, i.e. bank deposits outside the reserve base, without restriction with the ESCB until the start of the next business day at the interest rate of the deposit facility (overnight money). The deposit is due on the following business day and credited to the account from which the deposit was debited.
The ESCB will provide commercial banks with overnight credit in the event of a need for credit against eligible collateral. up to the beginning of the following business day at the marginal financing rate. The overnight credit may be applied for on business days up to a fixed date via the TARGET2 communication channel. An existing account overdraft at the end of a business day shall be deemed an application to draw on an overnight credit in the amount of the respective overdraft.
Commercial banks have the option of obtaining liquidity at any time within the lending limit of the loan collateral they have deposited, thus preventing liquidity bottlenecks.