It stands for overnight standing facility; a standing facility that involves a bank (a regulated entity) lending funds to other market participants, on an overnight basis, against high-quality collateral. Such a lending facility is conduced on a bilateral basis, either amongst regulated entities or between a regulator and a regulated entity, as the case might be. The main purpose of such a facility is the deployment of residual surpluses against a highly-rated securities or covering residual shortages while posting such securities.

An alternative standing facility was introduced later, literally the operational standing facility, as means to provide funds, on an expedited basis, for banks that are experiencing technical or one-off difficulties.