Remuneration of excess reserves and balances of bank's reserve accounts

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Credit institutions' reserve holdings exceeding the required minimum reserve level are remunerated at either the deposit facility rate or at 0 per cent, whichever is lower. Therefore, since June 2014 a negative rate has been applied to excess reserve holdings.

From 30 October 2019, the ECB Governing Council introduced a two-tier system for reserve remuneration. Under this system, part of banks' excess liquidity holdings, calculated as a multiple of banks' minimum reserve requirements, are exempt from the negative deposit facility rate.

For the purpose of calculating the exempt amount of excess liquidity holdings, the Governing Council decided to apply an initial multiple of 6 to banks' minimum reserve requirements and a rate of 0 per cent as the initial interest rate for the exempt tier. Both parameters can be adjusted by the Governing Council over time. The exempt tier of excess liquidity holdings is determined on the basis of the average end-of-calendar-day balances of banks' reserve accounts held with national central banks over a maintenance period.

Data on two-tier system are published at the end of each maintenance period. Further information on the two-tier system can be found on the ECB web site.

Information on the average balances of bank's reserve accounts holdings over one reserve maintenance period are published daily.

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