Minimum reserves are an integral part of the operational framework of monetary policy in the euro area.
The intention of the minimum reserve system is to pursue the aims of stabilising money market interest rates, creating (or enlarging) a structural liquidity shortage and possibly contributing to the control of monetary expansion.
The reserve requirement of each institution is determined in relation to elements of its balance sheet. In order to pursue the aim of stabilising interest rates, the Eurosystem's minimum reserve system enables institutions to make use of averaging provisions. This implies that compliance with the reserve requirement is determined on the basis of the institutions' average daily reserve holdings over a maintenance period of about six weeks. The reserve maintenance periods start on the settlement day of the main refinancing operation (MRO) following the Governing Council meeting at which the assessment of the monetary policy stance is pre-scheduled.
Through the reserve maintenance period ending on 20 December 2022, “minimum” or “required” reserves were remunerated at a rate corresponding to the Eurosystem’s average main refinancing operations rate over the maintenance period. From the reserve maintenance period which started on 21 December 2022 through that which ended on 19 September 2023, minimum reserves were remunerated at a rate corresponding to the Eurosystem’s average deposit facility rate over the maintenance period. As from the reserve maintenance period which commenced on 20 September 2023, minimum reserves are remunerated at a rate of 0%.