Main Refinancing Operations
The ECB's regular weekly collateralised lending to euro-area banks, and the rate charged on it — historically the Eurosystem's principal source of liquidity.
Also called: refi rate, ECB main refinancing rate.
An MRO is a repo: a bank pledges eligible collateral and receives central bank money for one week. It is lending against security, not a gift, and the collateral framework is where much of the ECB's real risk policy lives.
Before 2008 the MRO was the main tap through which liquidity reached the system, and the MRO rate was therefore the headline policy rate. Once excess liquidity became abundant, the deposit facility took over that role.
The ECB has signalled that MROs will regain importance as excess liquidity declines, with banks meeting more of their needs through demand-driven operations again.
The mechanics
- Direction
- The ECB lends; the bank pledges collateral and receives central bank money.
- Tenor
- One week, allotted weekly, fully allotted at a fixed rate since 2008.
- Balance sheet
- Eurosystem assets: lending up. Liabilities: the bank's account up.
The common misreading
That the MRO rate is still 'the' ECB rate. In a floor system the deposit facility rate is what markets price against; the MRO matters most as the ceiling of the narrowed corridor.
Related terms
- Deposit Facility RateThe rate the ECB pays euro-area banks on overnight deposits at the Eurosystem — since 2022 the rate through which the ECB steers short-term euro rates.
- Repurchase agreementThe sale of a security combined with an agreement to buy it back at a set price and date — legally a sale, economically a loan secured by collateral.
- Discount windowThe Federal Reserve's standing facility for lending directly to banks against collateral — the backstop that is supposed to cap how high short-term rates can go.
Primary sources
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