Bank reserves in the Eurosystem (minimum reserve requirements and excess reserves)

Monetary policy is conducted by managing central bank liquidity (bank reserves), which is made available to the banking system that features a structural liquidity deficit stemming from the obligation to comply with minimum reserve requirements and from autonomous factors.

The size of the minimum reserve requirement to be held as an average over the maintenance period is calculated as a percentage of specific liabilities in credit institutions' balance sheets, to which given rates are applied.

Credit institutions' deposits on reserve accounts with the central bank that are above minimum reserve requirements are defined as excess reserves. Excess liquidity is made up of the sum of excess reserves and the overnight deposits made using the central bank's deposit facility.

Further information on the liquidity conditions is available on the ECB's website. See the section on liquidity analysis.