Norges Bank offers standing facilities to banks. Amongst these is an intraday facility, referred to as intraday D-loans. Throughout the day, banks have unlimited access to borrowing reserves and interest-free loans against collateral. At the end of the day, the intraday loan must be repaid to the central bank. If a bank fails to repay an intraday loan, the loan automatically becomes an overnight loan in the central bank (see overnight D-loan below). The purpose of intraday loans is to ensure the smooth functioning of intrabank payment settlements.
The standing lending facility provide banks with access to borrowing reserves overnight from Norges Bank, normally at a higher interest rate than the key policy rate. The loan is referred to as an overnight loan (D-loan). Banks that have a shortage of reserves at the closing of Norges Bank’s settlement system must use the standing facility. Intraday loans that are not repaid before the closing of the settlement system are automatically converted into overnight loans. The interest rate on overnight loans is 1 percentage point higher than the key policy rate.
Banks can deposit unlimited reserves in Norges Bank via the standing deposit facility. The interest rate on deposits less than or equal to a bank’s quota is equal to the key policy rate. The interest rate on deposits in excess of the quota is lower, i.e. the reserve rate. The reserve rate is 1 percentage point lower than the key policy rate.
Interest rates on Norges Bank’s standing facilities are set by Norges Bank’s Executive Board.
See Interest rates og Quotas in the system for the management of bank reserves (Circular no. 1 / 1 March 2013)