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For the management of short term liquidity by the banks, namely overnight, the Central Bank has in place two types of standing facilities. These are the;
- Standing Credit Facility (SCF, introduced in June 2009) which is an overnight collateralised loan facility that provides funds to the commercial banks at a predetermined interest rate, so as to cover temporary end-of-day shortfalls that can arise in the daily settlement of payments. Collateral requirements are outlined in by the ' Determining Collateral Haircuts & Market Value ' document.
- Standing Deposit Facility (SDF, introduced in December 2009) which is an overnight deposit made with the Central Bank at a pre-established interest rate, for the banks to place any overnight excess reserves
As of July 19th 2017, the applicable rates on the SCF and the SDF serves as the ceiling and floor of the short-term interest rate corridor, respectively. The corridor is expected to guide financial institutions in setting their interest rates and encourage interbank transactions. Eventually, the interest rate corridor will create a conducive environment towards the introduction of a CBS policy rate.
Effective April 1st, 2018 the rates on the Standing Facilities stand at:
- 2.0% for the Standing Deposit Facility; and
- 8.0% for the Standing Credit Facility.