How do the monetary policy tools of the European System of Central Banks compare to the monetary policy tools of the Fed? Does the European Central Bank have a discount lending facility? Does the European Central Bank pay banks an interest rate on their deposits? Part 2 In general, the monetary policy tools of the European System of Central Banks are........ the monetary policy tools of the Fed. The European Central Bank uses........ as its primary tool for conducting monetary policy, which is........ the Fed's primary tool........... a discount lending facility................ banks an interest rate on their deposits.