What are structural operations?

What are structural operations?

Published: 5/6/2020

The central bank uses open market operations to affect the liquidity of the banking system and interest rate movements on the money market. Open market operations refer to the purchase or sale of assets (securities, foreign exchange, etc.) on the financial market, i.e. to the granting of loans to the banks and collecting of deposits from the banks. In terms of frequency and purpose, open market operations may be regular, meaning that their frequency is scheduled in advance and known, fine-tuning operations, meaning that they are conducted as required and structural. Structural operations are conducted in situations in which it is necessary to act due to structural changes in liquidity.

The Croatian National Bank held the first structural operation in 2016. The structural operations are aimed at providing banks with longer-term sources of kuna liquidity at an interest rate competitive to interest rates on other banks’ kuna liquidity sources which enables banks to lend to the economy and households in the domestic currency at an increased pace and under more favourable conditions.

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