EN ECB -PUBLIC 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 22 November 2013  
on the reserve requirements for credit institutions  
(CON/20 13/79)  
 
Introduction and legal basis  
On 11 October 2013, the European Central Bank (ECB) received a request from Lietuvos bankas for an 
opinion on a draft resolution amending the Rules on reserve requirements for credit institutions 
(hereinafter the ‘draft resolution’).  
The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the Eur opean Union and Article  2(2) of Council Decision 98/415/EC of 29 June 1998 on 
the consultation of the European Central Bank by national authorities regarding draft legislative provisions
1, as the draft resolution relates to instruments concerning monetary policy of a non- euro area 
Member State.  In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the 
European Central Bank, the Governing Council has adopted this opinion.  
 
1.  Purpose of the draft resolution  
1.1 The draft resolut ion aims  to: (a) extend the scope of reserve requirements by making credit unions 
subject to those requirements; (b) align the Lithuanian minimum reserves regime with Eurosystem 
standards; (c) change the procedure of calculatin g and approv ing reserve requi rements, and (d) 
make some technical amendments to the Rules on reserve requirements in order to take into 
account the special characteristics of credit unions.  
1.2 The draft resolution is to apply from 1 April 2014. As regards credit unions, t he reserve 
requirements are to apply to credit unions from the maintenance period starting after 
1 January  2015.  
 
2. General observation s 
2.1 Member States that have not adopted the euro retain their monetary policy powers, including in 
connection with their minimum r eserves frameworks. Nevertheless, it is beneficial for them to 
achieve consistency with the Eurosystem minimum reserves framework so that their credit institutions become acquainted with the reserve requirements that will apply to them following the 
adopti on of the euro by the Member State where they are established. The legal framework for the 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
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2 Eurosystem’s minimum reserve system consists of: ( a) Article 19 of the Statute of the European 
System of Central Banks and of the European Central Bank; ( b) Council Regulation (EC) 
No 2531/982; (c) Regulation ECB/2003/93; and ( d) in relation to the definition and calculation of 
the reserve base, Regulation ECB/2008/324. Article 11 and Annex III to Regulation ECB/2008/32 
require that each credit in stitution  uses the statistical information reported by credit institutions  
under this Regulation for minimum reserve purposes.  
2.2 The ECB welcomes the changes to Lithuanian law that will be brought about under the draft 
resolution as part of the preparations for the introduct ion of the euro in Lithuania. Within the 
framework of monetary policy, which remains a competence of Lietuvos bankas until the introduction of the euro, the draft resolution will further harmonise  the current Lithuanian 
minimum reserve system with the Euro system standards that will apply after the introduction of the 
euro.  
 
3. Institutions subject to reserve requirements  
The ECB welcomes the initiative to include Lithuanian credit unions under the scope of the Lithuanian 
minimum reserves regime. As the ECB has pointed out in several earlier opinions, Lithuanian credit 
unions should also be subject to reserve requirements
5. 
 
4.  Reserve base  
4.1 The ECB understands that the regulatory and supervisory framework for credit unions is currently 
being revised in L ithuania6. In the future, there will be a differentiation between a  credit union’s 
different share contributions . Primary share contributions  will carry both voting and dividend 
rights, with a number of restrictions  on their redemption. Supplementary share contributions will 
carry the right to receive dividend s, but no voting rights, and it will be possible to  redeem  them  
according to the rules set by the credit union itself7. 
4.2 According to Article 3(1) of Regulation ECB/2003/9, the liabilities resulting  from the acceptance 
of funds that  compris e an institution’s reserve base,  i.e. deposits and debt securities issued , are 
defined within the ECB’s reporting framework for money and banking statistics.  
 According to Regulation ECB/2008/32, the definition of ‘deposits ’ includes ‘shares issued by 
monetary financial institutions  (MFI s)’. Such shares are classified as deposits rather than  capital 
                                                 
2  Council Regulation (EC) No 2531/98 of 23 November 1998 concerning the applica tion of minimum reserves by the 
European Central Bank  (OJ L 318, 27.11.1998, p. 1).  
3  Regulation ECB/2003/9 of 12 September 2003 on the application of minimum reserves  (OJ L 250, 2.10.2003, p. 10).  
4  Regulation ECB/2008/32 of 19 December 2008 concerning the balance sheet of the monetary financial institutions sector  
(OJ L 15, 20.1.2009, p. 14).  
5  See paragraph 2 of CON/2012/110 and paragraph 14 of Opinion CON/2005/8, in which the ECB stressed that Lithuanian 
credit unions fall under the definition of a c redit institution within the meaning of the Consolidated Banking Directive, 
and will therefore be subject to the Eurosystem reserve requirements when Lithuania adopts the euro. All ECB opinions 
are published on the ECB’s website at www.ecb.europa.eu.  
6  See CON/2013/63.  
7  See Explanatory memorandum to the draft resolution.  
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3 and reserves if: ( a) there is a debtor -creditor economic relationship between the issuing MFI and 
the holder (regardle ss of any property rights in these shares); and ( b) the shares can be converted 
into currency or redeemed without significant restrictions or penalties. A notice period is not 
considered to be a significant restriction. In addition, such shares must comply  with the following 
conditions . First, the issuing MFI has no unconditional right to refuse redemption of its shares . 
Second, the shares are ‘value certain’, i.e. under normal circumstances they will be paid out at their 
nominal value in the event of redem ption. Third, in the event of the MFI’s insolvency, the holders 
of its shares are not legally subject to either : (a) the obligation to cover outstanding liabilities in 
addition to the nominal value of the shares , i.e. the shareholders’ participation in the  subscribed 
capital , or (b) any other onerous supplementary obligations. The subordination of shares to any 
other instrument issued by the MFI does not qualify as an onerous supplementary obligation.  
4.3 If, according to the future regulatory framework for  credit unions in Lithuania, the supplementary 
share contributions will comply with the above -mentioned criteria, such share contributions are to 
be considered as deposits and, accordingly, included in an institution’s reserve base for the purpose 
of calcu lating minimum reserves.  
4.4 On the basis of the information provided in the consultation letter,  the ECB also understands that , 
according to the future regulatory framework for credit unions in Lithuania, primary share 
contributions will not fulfil the cr iteria of ‘ shares issued by MFIs’ . Therefore, primary share 
contributions  are not to be considered as deposits  and should not be included in an institution’s 
reserve base.  
 
5. Reserve ratios  
5.1 The ECB notes8 that a reserve ratio of 3  % is applied to most  of the liabilities included in the 
reserve base, while the Eurosystem applies 1 %. 
5.2 Similar to the Eurosystem standards : (a) deposits with an agreed maturity period of over two years ; 
(b) deposits redeemable at a notice period of over two years;  (c) debt securities issued with an 
original maturity of over two years ; and (d) repurchase agreements continue to be subject to a 
reserve ratio of 0  % under the Lithuanian minimum reserves regime.  
 
6. Remuneration  
The ECB notes9 that under the Lithuanian minimu m reserves regime, the holdings of required reserves 
are remunerated not by reference to the ECB rate for the main refinancing operations, as stipulated in 
Article  8 of Regulation ECB/2003/9, but rather by reference to the ECB deposit facility rate.  
  
This opinion will be published on the ECB’s website.  
                                                 
8  Also see paragraph 1.1 of CON/2012/110,  
9  Also see paragraph 3 of CON/2012/110.  
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4  
 
Done at Frankfurt am Main, 22 November 2013 
 
[signed]  
 
The President of the ECB  
Mario DRAGHI