EN ECB-PUBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 29 February 2012  
on minimum reserve requirements 
(CON/2012/16) 
 
Introduction and legal basis  
On 6 February 2012 the European Central Bank (E CB) received a request from Latvijas Banka for an 
opinion on a draft regulation on the minimum reserve requirements for credit institutions (hereinafter the 
‘draft regulation’). 
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 European 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 
provisions1, as the draft regulation relates to instruments of monetary policy. 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 regulation 
The draft regulation replaces the current regulation with the aim of further harmonising the Latvian 
minimum reserve requirements with those of Eurosystem . It clarifies the application of minimum reserve 
requirements, in particular, the reporting procedures and calculations following mergers or divisions of 
credit institutions. It also amends the criteria fo r granting exemptions from reserve requirements and 
aligns terminology with other legal acts. 
 2. General observations Member States that have not adopted the euro re tain their monetary policy powers, including in 
connection with their minimum reserves frameworks. Ne vertheless, it is beneficial  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 adoption of the euro by the Member 
State where they are established. The legal framewo rk for the Eurosystem’s minimum reserve system 
consists of: (i) Article 19 of the Statute of the Euro pean System of Central Banks and of the European 
Central Bank; (ii) Council Regulation (EC) No 2531 /98 of 23 November 1998 concerning the application 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
ECB-PUBLIC  
2 of minimum reserves by the European Central Bank2; (iii) Regulation ECB/2003/9 of 12 September 2003 
on the application of minimum reserves3; and (iv) in relation to the definition and calculation of the 
reserve base, Regulation ECB/2008/32 of 19 December 2008 concerning the balance sheet of the monetary financial institutions sector
4. Article 11 and Annex III to Re gulation ECB/2008/32 require the 
use of statistical information by credit institutions  reported under this Regulation for minimum reserve 
purposes. 
 3. Credit unions Previous ECB opinions on Latvijas Banka’s minimu m reserve requirements and other monetary policy 
instruments
5 emphasised the need to further align the Latvian minimum reserves regime with Eurosystem 
standards. In particular, Latvian credit unions will  be subject to the Eurosystem’s minimum reserve 
requirements when Latvia adopts the euro. 
 4. Reserve ratios  
ECB has also previously commented on the provision
6 entitling Latvijas Banka to establish different 
reserve ratios for deposits with an agreed maturity ov er two years, deposits redeemable at notice over two 
years, debt securities issued with an  agreed maturity over two years, re pos and other liabilities. Under this 
provision, reserve ratios applied by Latvijas Banka co uld differ from the fixed reserve ratios in Article 4 
of Regulation ECB/2003/9. These differences between  the Eurosystem and Latvia will need to be 
eliminated on Latvia’s accession to the euro area. 
 5. Reporting procedures The ECB welcomes the introduction of a time limit for revising calculations of credit institutions’ 
minimum reserves
7 that further aligns Latvian reporting requirements with those of the Eurosystem. The 
ECB also welcomes the modifications to the pro cedures following mergers or divisions of credit 
institutions8. 
 6. Exemptions and lists The ECB welcomes the introduction of separate lists fo r institutions subject to reserve requirements and 
institutions exempt from reserve requirements which brings the Latvian minimum reserves regime more 
in line with the procedures in Article 2(3) of Re gulation ECB/2003/9. The ECB notes that the Latvian 
                                                 
2  OJ L 318, 27.11.1998, p. 1.  
3  OJ L 250, 2.10.2003, p. 10.  
4  OJ L 15, 20.1.2009, p. 14. 
5  See ECB Opinions CON/2006/11, CON/2008/89, CON/2010/18  and CON/2010/77. All ECB opi nions are available on 
the ECB’s website at www.ecb.europa.eu. 
6  See Section III of the draft regulation. 
7  See Section V of the draft regulation. 
8  See Section VI of the draft regulation. 
ECB-PUBLIC  
3 minimum reserve regime, as provided in the draft regul ation, does not provide for exempting institutions 
from reserve requirements because they are subject to  freezing of funds and/or other measures imposed 
by the European Union or a Memb er State under Article 75 of the Treaty or a decision by the ECB’s 
Governing Council. The ECB welcomes amendments to  the criteria for granting exemptions. However, 
the grounds for exempting credit institutions from reser ve requirements provided for in Article 27 of the 
draft regulation are narrower than those provided for in Article 2(2) of Regulation ECB/2003/9. Therefore, the ECB recommends further alignment with Regulation ECB/2003/9. 
 This opinion will be published on the ECB’s website.    Done at Frankfurt am Main, 29 February 2012. 
 
[signed] 
 
The President of the ECB 
Mario DRAGHI