OPINION OF THE EUROPEAN CENTRAL BANK
at the request of the Banque de France under Articles 109l (2) and 109f (6) of the Treaty
establishing the European Community (hereinaft er referred to as the Treaty) and Article 5.3
of the Statute of the European Monetary Inst itute (hereinafter referred to as the EMI) on a
draft Decision of the Council for Monetary Policy of the Banque de France, completed by an
Instruction of the Banque de France, amending the regime of minimum reserves in
Metropolitan France for the period starting on 16 October 1998 and ending on 31 December
1998. 
CON/98/43
1. On 8 September 1998 the European Central Bank  (hereinafter referred to as the ECB)
received a request from the Banque de France for an opinion on a draf t Decision (hereinafter
referred to as the Decision) of the Council for Monetary Policy of the Banque de France,
completed by an Instruction (hereinafter refe rred to as the Instruction) of the Banque de
France, amending the regime of minimum reserves in Metropolitan France for the periodstarting on 16 October 1998 and ending on 31 December 1998 .
2. In accordance with Article 109l (2) of the Tr eaty, the ECB has taken over the advisory
functions of the EMI, which went into liqui dation upon the establishment of the ECB on 1 June
1998. The ECBs competence to deliver an opini on is based on Article 1.1, second indent, of
the Council Decision (93/717/EC) of 22 November 1993 on the consultation of the EMI by the
authorities of the Member States on draft legisla tive provisions, as the Decision and Instruction
contain rules on monetary policy instruments. In accordance with Articles 12.4 and 47.1,second indent, of the St atute of the European System of Central Banks and of the European
Central Bank (hereinafter referred to as the S tatute), this Opinion has been adopted by the
Governing Council of the ECB with the cont ribution of the General Council of the ECB.
3. The aim of the Decision is to prepare the syst em of minimum reserves in Metropolitan France
for the situation in 1999, when minimum reserves will be imposed by the ECB. To that end andtaking account of the Recommendation of the ECB of 7 July 1998 for a Council Regulation
concerning the application of minimum reserv es by the ECB, the Decision introduces the
following amendments:
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- Institutions subject to reserve requireme nts: Institutions with total liabilities not
exceeding 500,000,000 FF will loose their exem ption from reserve requirements
after 15 November 1998. In addition, an allowance of 1,000,000 FF to be deductedfrom the amount of the reserve requirement shall be granted to each institution;
- Reserve basis and amount: The reserve basis is extended in accordance with the
specifications set forth in the General Documentation. By way of transition: 1)
liabilities vis-à-vis correspondents outside the euro area are excluded from thereserve basis for technical reasons, and 2) all outstanding debt securities, including
those held by other credit institutions subj ect to reserve requirements, with initial
maturity of less than two years, are take n into account for the application of the 2%
reserve ratio;
- Maintenance periods: Two maintenance periods are defined for the end of 1998: 1)
from 16 October till 15 November, and 2) from 16 November till 31 December;
- Reserve ratio and calculation of reserve requirements: The Council for Monetary
Policy of the Banque de France decided to set a reserve ratio of 2% applicable to all
liabilities included in the reserve basis a nd a reserve ratio of 0% applicable to
repurchase agreements, deposits with agreed maturity over two years and debtsecurities with agreed maturity over two years. Reserves will be remunerated at alevel which is the average of the 7 day fixed rate tender offers by the Banque deFrance for the relevant maintenance period. Such remuneration will be paid within a
period of maximum two days following th e last day of the maintenance period.
- Sanctions: In case of non-compliance with minimum reserve requirements the
Banque de France will levy a penalty interest fixed at 3% above the rate set by the
Banque de France for repurchase agreements between 5 and 10 days. A higherpenalty interest, with a maximum of 0,1% per day, may be used to sanction seriousor repeated offences as well as deceptive declarations.
The ECB understands that in Stage Three of M onetary Union the minimum reserves regime of
the Banque de France will cease to extend to credit institutions established in Monaco.
The ECB notes that Article 3 of the Instructi on maintains a penalty for late data submission
which is set at 10% above the reserve requirement  applicable on the basis of the last available
data. This rule appears less strict than the sanctions regime for infringement of reporting
obligations that will be introduced in Stage Three. 
With respect to Annex 3 to the Instruction, th e ECB deems it advisable to clarify that excess
reserves will not be remunerated.
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4. The ECB welcomes the proposal, which is aimed at facilitating the changeover to the new
regime for minimum reserves that will apply as from 1 January 1999.
5. The ECB confirms that it has no objection to this  Opinion being made public by the competent
French authorities at their discretion.
Done at Frankfurt am Main on 23 September 1998
The Vice-President of the ECB
[signed]
C. Noyer