The ECB requires credit institutions to hold compulsory deposits on accounts with the national central banks: these are called “minimum” or “required” reserves. The amount of required reserves that each credit institution has to hold is determined by its reserve base multiplied by a minimum reserve ratio.

The ECB applies a uniform positive minimum reserve ratio, which has stood at 1% since 18 January 2012, down from the 2% introduced on 1 January 1999. The reserve base is determined, subject to a number of exceptions, from credit institutions’ deposits and issued debt securities. A lump-sum allowance of €100,000 should also be deducted by each credit institution from the amount of its reserve requirement. This allowance is intended to reduce administrative costs for credit institutions with very small required minimum reserves.

To meet their reserve requirements, credit institutions have to hold balances on their current accounts with the national central banks. The Eurosystem’s minimum reserve system enables counterparties to make use of averaging provisions, implying that compliance with the reserve requirements is determined on the basis of the average of the end-of-calendar-day balances on the counterparties’ reserve accounts over a maintenance period. Until 20 December 2022, the credit institutions' reserve holdings were remunerated at the average interest rate of the main refinancing operations during the relevant reserve maintenance period. On 27 October 2022, the Governing Council decided that the minimum reserves would be remunerated at the deposit facility rate. The change became effective with the reserve maintenance period beginning on 21 December 2022. By decision of the Governing Council of 27 July 2023, reserve balances will be remunerated at 0% as of the maintenance period beginning on 20 September 2023 (see press release below).

In times of a structural liquidity shortage, the minimum reserve system helps to stabilise money market rates and creates demand for central bank money in the banking sector. During periods of negative interest rates paired with high excess reserves, the Eurosystem used the required minimum reserves to determine the allowances under the two-tier system for remunerating excess reserves (see corresponding link in the “Further information” section).

Data on the amount of required minimum reserves and their fulfilment are published on page 42 of the statistical section of the Monthly Report of the Deutsche Bundesbank.