Reserve Requirements
Minimum reserves are an important part of the Central Bank's monetary policy operational framework. They are designed to ensure the stabilisation of money market interest rates and to create or enlarge a structural liquidity deficit.
The amount of reserves to be held by each institution is determined by its reserve base. In order to ensure money market rates are stabilised, institutions can make use of averaging provisions when it comes to fulfilling reserve requirements. This means that compliance with these requirements is determined on the basis of institutions’ average daily holdings of reserves over the maintenance period, which is usually around six weeks. Institutions can therefore smooth the effects of temporary liquidity fluctuations.
From 20th September 2023, required reserves are remunerated at 0%. Reserves held in excess of requirements i.e. excess reserves, are remunerated at zero per cent or the deposit facility rate, whichever is lower.
Minimum Reserve Maintenance Period and Remuneration Rate
Maintenance Period: |
18 December 2024 - 4 February 2025 |
Remuneration Rate
(on required reserves): |
0.00%
|