46

In a context marked by manipulation attempts and by declining money market activity, this paper takes a new look at reference interest rates. More specifically, we discuss the operational tools used by central banks to steer those rates and we compare the operational frameworks of the Federal Reserve in the United States and of the European Central Bank in the euro area. We show how the interest rate corridor has provided a ceiling and a floor to the unsecured overnight interest rate in Europe and how the corridor implemented by the Federal Reserve at the peak of the financial crisis was subsequently adjusted to offer an effective floor to its interbank market, notably through the implementation of an overnight reverse repurchase agreements program. JEL Codes: E520