27 July 2023

• Minimum reserves to be remunerated at 0%
• Change preserves the effectiveness and improves the efficiency of monetary policy

The Governing Council of the European Central Bank (ECB) today decided to set the remuneration of minimum reserves at 0%. The change will become effective as of the beginning of the reserve maintenance period starting on 20 September 2023.

Minimum reserves are reserve balances that credit institutions are required to hold with their Eurosystem national central bank on average over a maintenance period. Credit institutions are required to hold a minimum amount equivalent to 1% of specific liabilities, mainly customers’ deposits. Minimum reserves are currently remunerated at the ECB’s deposit facility rate (DFR).

In the current conditions of ample liquidity, the interest paid on the reserves that banks hold in the ECB’s deposit facility – i.e. reserves beyond the minimum required level – is the Governing Council’s main instrument for setting…