ECB Reserve Requirement Ratio

About this data

The European Central Bank's reserve requirement ratio and the actual reserve balances of euro area banks represent two sides of the same framework. RATIOS: Since the inception of the euro, the ratio stood at 2% applied to overnight deposits, deposits with an agreed maturity or redeemable at notice up to 2 years, debt securities with a maturity of up to 2 years, and money market paper; the ECB lowered it to 1% starting from the maintenance period beginning on 18/01/2012 (decision of 08/12/2011) and has kept it unchanged since. Deposits with a maturity of over 2 years, repos, and debt securities with a maturity of over 2 years have consistently remained at 0%. INTEREST RATES paid on required reserves tracked the main refinancing rate throughout 1999–2022, before the ECB reduced them to EXACTLY 0% from October 2023—a major shift that has received little attention: it completely cuts off an income stream for commercial banks and is equivalent to an implicit tightening. The two Y-axes: the ratio and the interest rate are both read in % per annum but differ fundamentally in nature—one is a regulatory parameter, while the other is an actual payout rate. Source: European Central Bank (ECB Data Portal).