IEOM’s monetary policy

Refinancing lines

These are monetary policy instruments secured by eligible assets pledged to the Single Collateral Pool (Panier Unique de Garantie — PUG). They enable IEOM to provide medium – and long-term refinancing to credit institutions at its own discretion.

At its meeting on 24 March 2022, the Supervisory Board decided to make refinancing line rates more flexible. The variable-rate refinancing lines were allocated as follows :

• 6-month refinancing line (LR6): TLR + 0 basis points ;
• 18-month refinancing line (LR18): TLR + 10 basis points ;
• 24-month refinancing line (LR24): TLR + 15 basis points ;
• 36-month refinancing line (LR36): TLR + 20 basis points.

The rediscounting facility

Rediscounting is the IEOM’s traditional refinancing mechanism. It enables credit institutions in the issuance zone to obtain one-week liquidity in exchange for temporarily transferring receivables from eligible businesses.

Rediscounting business loans at the so-called ‘preferential rate‘ helps direct credit towards small and medium-sized enterprises, thereby supporting economic development. It also moderates borrowing costs by capping the maximum ‘exit rate’ applied to rediscounted loans. This exit rate is defined as the IEOM’s rediscounting rate plus the maximum intermediation margin, which has been set at 2.75% since 12 December 2006.

Deposit facility

IEOM provides a deposit facility to credit institutions in its issuance zone, encouraging them to hold excess liquidity within the zone.

Marginal Lending Facility (facilité de prêt marginal — FPM)

In the absence of an organised interbank market within the zone, the MLF acts as a liquidity management tool for credit institutions. It enables institutions to adjust their liquidity over a 48-hour period or carry out financial arbitrage. The system is secured through the transfer of eligible receivables under theSingle Collateral Pool (Panier Unique de Garantie — PUG)

Intraday credit facility

Credit institutions have access to an intraday credit facility secured by the Single Collateral Pool (SCP). This facility enables them to obtain liquidity from IEOM during the day to cover temporary debit positions, such as when their current account’s credit balance is exceeded by a negative clearing balance. These funds must be repaid before the end of the business day.

Emergency liquidity assistance (dispositif de liquidités d’urgence — DLU)

The DLU is an emergency mechanism that provides loans to solvent credit institutions facing a liquidity crisis. It acts as a lender of last resort, thereby contributing to financial stability in the region.

Required reserves

Required reserves are held in the accounts that credit institutions maintain with IEOM. In the French Pacific collectivities, required reserves have been based exclusively on liabilities (i.e. customer deposits managed by banks) since December 2017. The IEOM’s reserve requirement system contributes to the region’s financial stability.

Collateral requirements for monetary policy operations

In order to access the refinancing operations offered by IEOM (including refinancing lines and rediscounting), credit institutions must transfer assets to the relevant collateral or rediscounting frameworks.

IEOM accepts receivables from businesses as eligible assets and, since 2020, has also accepted additional private receivables. Assets transferred to the rediscounting facility are used exclusively for rediscounting operations, while those transferred to the collateral framework are used for other refinancing tools. Assets submitted as collateral are valued and allocated to a single collateral ool (PUG), with a portion assigned to a dedicated pool for emergency liquidity assistance (DLU).