The move under discussion would raise unremunerated minimum reserves from 1% to 2%, trimming the Eurosystem’s interest bill as policymakers reassess excess liquidity this year.
The European Central Bank is considering raising the minimum reserve requirement for lenders to 2% from 1%, a step that would force banks to hold more cash in unremunerated accounts and reduce the interest costs borne by the Eurosystem. Six sources told Reuters the idea is being debated by policymakers, though it has not been formally discussed by the ECB's Governing Council and remains at an early stage, with a decision expected by the autumn. The change would apply to customer deposits and some other forms of funding, and it would also absorb part of the euro zone's excess liquidity as the ECB reviews the framework it uses to steer money markets and withdraw crisis-era support. Reuters calculations show the ECB and the 21 national central banks of the euro area are paying 2.25% on about €2.16 trillion of excess liquidity, for annual outlays of roughly €48.7 billion. Doubling mandatory reserves from €173.56 billion would cut that combined annual interest bill by nearly €4 billion. The issue has become politically sensitive because central bank losses can limit dividend payments to governments and, in extreme cases, require state capital support.