EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 31 May 2005 
at the request of Magyar Nemzeti Bank  
on a draft regulation on the calculation, method  of allocation and placement of minimum reserves   
(CON/2005/14)  
 1. On 29 April 2005 the European Central Bank (E CB) received a request from Magyar Nemzeti 
Bank (MNB) for an opinion on a draft regulation on the calculation, method of allocation and 
placement of minimum reserves (herei nafter the ‘draft regulation’). 
2. The ECB’s competence to deliver an opinion is based on Article 2(2) of Council Decision 
98/415/EC of 29 June 1998 on the consultati on of the European Central Bank by national 
authorities regarding draft legislative provisions
1, as the legislative proposal contains provisions 
concerning the application of minimum reserve re quirements for the implementation of monetary 
policy in a Member State that ha s not adopted the euro. 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. 
3. The draft regulation will apply to credit institutio ns with an operating licence which are located in 
Hungary, including branches of credit institutions regi stered outside Hungary. It defines the reserve 
base and how the minimum reserves are to be held with MNB. MNB remunerates the required reserves according to a formula corresponding to th e ECB’s, and the draft regulation amends the 
date thereof. Furthermore, the draft regulati on lays down the procedures for verification and 
rectification of data, and procedures in the event of infringement of the minimum reserve requirements. Finally, the draft regulation specifi es the sanctions regime to be applied by MNB 
where an infringement of the minimum reserve requirements has been identified. Generally 
speaking, the draft regulation does not significantly modify the existing minimum reserve system in Hungary. It only modifies its scope of app lication and MNB’s powers to impose sanctions, as 
well as making a minor change to the remuneration date. 
4. This is the first opportunity for the ECB to co mment on MNB’s minimum reserve framework, after 
Hungary’s accession to the European Union in 2004. In view of Hungary’s intention to adopt the 
euro and the single monetary policy this entails , the ECB acknowledges MNB’s intention to bring 
the Hungarian minimum reserve system into line with the ECB’s minimum reserve framework. For 
                                                     
 
1  OJ L 189, 3.7.1998, p. 42. 
2 this reason the ECB has undertaken a detailed co mparison of the proposed MNB minimum reserve 
regime with that of the Eurosystem. 
5. The ECB welcomes the draft regulation as it furt her brings into line the Hungarian minimum 
reserve framework with that of the ECB. The E CB welcomes the draft regulation’s introduction of 
an express reference to credit institutions with an operating licence that are registered in European 
Economic Area countries and that conduct busi ness in Hungary, thereby accommodating the 
‘European Passport’ established by the Consolidated Banking Directive2. 
6. The sanctions regime in Article 7 of the draft re gulation distinguishes two cases in which sanctions 
may be applied: (a) where the average daily ba lance on the credit institution’s current account is 
insufficient, on the basis of data corrected afte r the end of the maintenance period by the credit 
institution; and (b) where the MNB identifies a sh ortfall, either through regular verification of 
compliance on the basis of end-of-month supervisory balance sheet data or by extraordinary on-site 
inspection. It should be noted that the ECB’s fra mework does not provide for such a distinction 
because the ECB does not allow revisions to the r eserve requirement data after the start of the 
reserve maintenance period to which the reserve requirement refers. Indeed, any error in the 
reporting of statistical data affecting the reserve  base would be dealt with under the ECB’s specific 
statistical reporting sanctions regime.  
7. The sanctions provided for in the draft regulati on in the event of a ‘reserve deficit’ require 
unremunerated funds equal to the average daily shortf all for that maintenance period to be held on 
a separate account at MNB. In the second instance mentioned in paragraph 6 above (i.e. infringements identified by MNB), the amount would be  1.5 times the average daily shortfall. In 
both cases the funds would be held on an unremunerate d basis for 30 days. If the credit institution’s 
liquidity situation does not allow for the imposition of  such a sanction, the holding of funds may be 
spread over several maintenance pe riods. Moreover, if the credit ins titution’s holdings at the central 
bank do not cover the required funds, the central bank grants credit to  the credit institution for the 
missing amount at a rate twice MNB’s base rate. On the other hand, the ECB, in the event of 
infringement of the minimum reserve requirement s, notifies the corresponding sanction, a nominal 
amount determined on the basis of a predetermined fo rmula, to the credit institution and its right to 
appeal within five working days. If the credit in stitution does not appeal, the sanction is imposed 
on the infringing credit institution’s reserve account.
 
                                                      
2  Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000 relating to the taking up and 
pursuit of the business of credit institutions, OJ L 126, 26. 5.2000, p. 1. Directive as last amended by Commission 
Directive 2004/69/EC (OJ L 125, 28.4.2004, p. 44). 
3 8. This opinion will be published on the ECB’s website. 
  
Done at Frankfurt am Main, 31 May 2005. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET