A variable rate tender is an auction procedure generally used as part of the Eurosystem’s open market operations. In a variable rate tender, the Eurosystem defines in advance how much central bank money (liquidity) it is prepared to provide to the banking system as part of the auction. The banks participating in the auction submit their bids for both the amount of central bank money that they are willing to transact as well as the interest rate at which they wish to carry out the transaction. As in a regular auction, the highest bidder receives the first allotment – until the entire amount that the Eurosystem has provided is distributed among the highest bidders. The lowest interest rate at which liquidity is allotted is called the marginal interest rate. As an alternative to the variable rate tender, the Eurosystem can also issue fixed rate tenders.