Recommendation of the European Central Bank for a Council Regulation (EC) concerning the application of minimum reserves by the European Central Bank
Date: 1998-07-07
Institutions: European Central Bank
Subjects: European Central Bank, financial legislation, management accounting, reserves

C  246/6

EN

Official  Journal  of  the  European  Communities

6.8.98

Recommendation  of  the  European  Central  Bank  for  a  Council  Regulation  (EC)  concerning  the
application  of  minimum  reserves  by  the  European  Central  Bank

(98/C  246/06)

(Submitted  by  the  European  Central  Bank  on  7  July  1998)

THE  COUNCIL  OF  THE  EUROPEAN  UNION,

Having  regard  to  the  Statute  of  the  European  System  of
Central  Banks  and  of  the  European  Central  Bank  (the
Statute)  and  in  particular  Article  19.2  thereof,

conflict  between  the  provisions  of  the  Council  Regu(cid:220)
lation  (EC)  concerning  the  powers  of  the  European
Central  Bank  to  impose  sanctions  and  the  provisions
of  the  present  Regulation  enabling  the  ECB  to
impose  sanctions,  the  provisions  of  the  present  Regu(cid:220)
lation  should  prevail;

Having  regard  to  the  recommendation  of  the  European
Central  Bank  (the  ECB),

Having 
Parliament,

regard 

to 

the  opinion  of 

the  European

Having  regard  to  the  opinion  of  the  Commission,

In  accordance  with  the  procedure  foreseen  in  Article
the  European
106(6)  of 
Community  (the  Treaty)  and  in  Article  42  of  the  Statute,

the  Treaty 

establishing 

(1)(cid:217)Whereas  Article  19.2,  in  conjunction  with  Article
43.1  of  the  Statute,  paragraph  8  of  the  Protocol  (11)
on  certain  provisions  relating  to  the  United  Kingdom
Ireland  and
of  Great  Britain  and  Northern 
paragraph  2  of 
(12)  on  certain
the  Protocol 
provisions  relating  to  Denmark,  shall  not  confer  any
rights  or  impose  any  obligations  on  a  non(cid:220)partici(cid:220)
pating  Member  State;

(2)(cid:217)Whereas  Article  19.2  of  the  Statute  requires  the
Council,  inter  alia,  to  define  the  basis  for  minimum
reserves  and  the  maximum  permissible  ratios  between
those  reserves  and  their  basis;

(3)(cid:217)Whereas  Article  19.2  of  the  Statute  also  requires  the
Council  to  define  the  appropriate  sanctions  in  cases
on  non(cid:220)compliance  with  those  requirements;  whereas
specific  sanctions  are  set  out  herein;  whereas  the
present  Regulation  refers  to  the  Council  Regulation
(EC)  concerning 
the  European
Central  Bank  to  impose  sanctions  for  the  principles
imposition  of
and  procedures 
sanctions  and  provides  for  a  simplified  procedure  for
the  imposition  of  sanctions  in  the  event  of  certain
kinds  of  infringements;  whereas  in  the  event  of  a

the  powers  of 

relating 

the 

to 

(4)(cid:217)Whereas  Article  19.1  of  the  Statute  provides  that  the
Governing  Council  of  the  ECB  may  establish  regu(cid:220)
lations  concerning  the  calculation  and  determination
of  the  required  minimum  reserves;

for 

functions, 

the  system 
reserves  needs 

(5)(cid:217)Whereas  to  be  effective  as  an  instrument  for  the
performance  of  money(cid:220)market  management  and
the
monetary  control 
imposition  of  minimum 
to  be
structured  so  that  the  ECB  has  the  ability  and  flexi(cid:220)
bility  to 
impose  reserve  requirements  within  the
context  of  and  dependent  on  changing  economic  and
financial  conditions  among  participating  Member
States;  whereas  the  ECB  may 
impose  minimum
reserves  on  liabilities  resulting  from  off(cid:220)balance(cid:220)sheet
items,  in  particular  those  that  are  either  individually
or  in  combination  with  other  on(cid:220)balance(cid:220)sheet  or
off(cid:220)balance(cid:220)sheet 
liabilities
recorded  on  the  balance  sheet,  in  order  to  limit  the
possibilities  of  circumvention;

items,  comparable  with 

in  establishing  detailed  regu(cid:220)
(6)(cid:217)Whereas  the  ECB, 
imposition  of  minimum  reserves,
lations  for  the 
including  determining  the  actual  reserve  ratios,  any
remuneration  of  reserves,  any  exemptions 
from
minimum  reserves  or  any  modifications  to  such
requirements  applicable  to  any  specific  group  or
groups  of  institutions,  shall  be  bound  to  act  pursuant
to  the  objectives  of  the  European  System  of  Central
Banks  (the  ESCB)  as  set  out  in  Article  105(1)  of  the
Treaty  and  as  reflected  in  Article  2  of  the  Statute,
the  principle  of  not
which 
inducing  significant  undesirable  delocation  or  disin(cid:220)
termediation;  whereas 
such
the 
minimum  reserves  may  constitute  an  element  of  the
definition  and 
the  monetary
implementation  of 
policy  of  the  Community,  being  one  of  the  basic
tasks  of  the  ESCB  as  specified  in  Article  105(2),  first
indent,  of  the  Treaty  and  as  reflected  in  Article  3.1,
first  indent,  of  the  Statute;

imposition  of 

inter  alia, 

implies, 

6.8.98

EN

Official  Journal  of  the  European  Communities

C  246/7

(7)(cid:217)Whereas  the  sanctions  provided 

in  the  event  of
non(cid:220)compliance  with  the  obligations  set  out  in  this
Regulation  are  without  prejudice  to  the  possibility  of
the  ESCB  establishing  appropriate  enforcement
relations  with  counterparties,
provisions 
including  the  partial  or  total  exclusion  of  an  insti(cid:220)
tution  from  monetary  policy  operations  in  the  case
of  serious 
infringements  of  the  minimum  reserve
requirements;

its 

in 

(8)(cid:217)Whereas  the  provisions  of  this  Regulation  can  only
be  effectively  applied  in  their  entirety  if  participating
Member  States  have  adopted  the  necessary  measures
with  a  view  to  ensuring  that  their  authorities  have
the  powers  to  assist  and  collaborate  fully  with  the
ECB  in  carrying  out  the  collection  and  verification
of  information  as  required  by  Article  6  of  this  Regu(cid:220)
lation,  in  conformity  with  Article  5  of  the  Treaty,

HAS  ADOPTED  THIS  REGULATION:

Article  3

Basis  for  minimum  reserves

1.(cid:218)(cid:217)The  basis  for  minimum  reserves  which  the  ECB
may  require  institutions  to  hold  according  to  Article  19.1
of  the  Statute  shall  include,  subject  to  the  provisions
specified  in  paragraphs  2  and  3,  (i)  liabilities  of  the  insti(cid:220)
tution  resulting  from  the  acceptance  of  funds  together
with  (ii)  liabilities  resulting  from  off(cid:220)balance(cid:220)sheet  items,
but  excluding  (iii)  fully  or  partly,  liabilities  which  are
owed  to  any  other  institution  according  to  modalities
which  shall  be  specified  by  the  ECB,  and  (iv)  liabilities
which  are  owed  to  the  ECB  or  to  a  national  central
bank.

in 

the 

liabilities 

2.(cid:218)(cid:217)For 
form  of  negotiable  debt
instruments,  the  ECB  may  specify,  alternatively  to  the
provision  in  paragraph  1(iii),  that  liabilities  which  are
owed  by  one  institution  to  another  shall  be  fully  or
partly  deducted  from  the  basis  for  minimum  reserves  of
the  institution  to  which  they  are  owed.

Article  1

Definitions

3.(cid:218)(cid:217)The  ECB  may,  on  a  non(cid:220)discriminatory  basis,  allow
the  deduction  of  specific  types  of  assets  from  categories
of 
liabilities  forming  part  of  the  basis  for  minimum
reserves.

For  the  purposes  of  this  Regulation:

1. participating  Member  State:  shall  mean  a  Member
in

the  single  currency 

State  which  has  adopted 
accordance  with  the  Treaty;

2. national  central  bank:  shall  mean  the  central  bank  of  a

participating  Member  State;

3. institution:  shall  mean  any  entity  in  a  participating
Member  State  which,  under  the  terms  of  Article  19.1
of  the  Statute,  the  ECB  may  require  to  hold  minimum
reserves;

4. reserve  ratio:  shall  mean  such  percentage  as  the  ECB
may  specify  in  accordance  with  Article  19.2  of  the
Statute  of  the  basis  for  minimum  reserves;

5. sanctions:  shall  mean  fines,  periodic  penalty  payments,
penalty  interest  and  non(cid:220)interest(cid:220)bearing  deposits.

Article  4

Reserve  ratios

ratios,  which 

1.(cid:218)(cid:217)Reserve 
specify
according  to  Article  19.2  of  the  Statute,  shall  not  exceed
10(cid:216)%  of  any  relevant  liabilities  forming  part  of  the  basis
for  minimum  reserves  but  may  be  0(cid:216)%.

the  ECB  may 

2.(cid:218)(cid:217)Subject  to  paragraph  1,  the  ECB  may,  on  a
non(cid:220)discriminatory  basis,  specify  differing  reserve  ratios
for  specific  categories  of  liabilities  forming  part  of  the
basis  for  minimum  reserves.

Article  5

Regulatory  power

For  the  purpose  of  Articles  2,  3  and  4  of  this  Regulation,
the  ECB  shall  adopt,  where  appropriate,  regulations  or
decisions.

Article  2

Right  to  exempt  institutions

Article  6

Right  to  collect  and  verify  information

The  ECB  may,  on  a  non(cid:220)discriminatory  basis,  exempt
institutions  from  minimum  reserves  in  accordance  with
criteria  established  by  the  ECB.

1.(cid:218)(cid:217)The  ECB  shall  have  the  right  to  collect  from  insti(cid:220)
tutions  the  information  necessary  for  the  application  of
minimum  reserves.  Such 
information  shall  be  confi(cid:220)
dential.

C  246/8

EN

Official  Journal  of  the  European  Communities

6.8.98

2.(cid:218)(cid:217)The  ECB  shall  have  the  right  to  verify  the  accuracy
and  quality  of  the  information  which  institutions  provide
to  demonstrate  compliance  with  the  minimum  reserves.
The  ECB  shall  notify  the  institution  of  its  decision  to
verify  data  or  to  effect  their  compulsory  collection.

3.(cid:218)(cid:217)The  right  to  verify  data  shall  include  the  right  to:

(a)(cid:217)require  the  submission  of  documents;

(b) examine  the  books  and  records  of  the  institutions;

(c) take  copies  or  extracts  from  such  books  and  records,

and

(d) obtain  written  or  oral  explanations.

institution  obstructs  the  collection  and/or
When  an 
verification  of 
information,  the  participating  Member
State  in  which  the  relevant  premises  are  located  shall
afford  the  necessary  assistance,  including  ensuring  access
to  the  premises  of  the  institution,  so  that  the  abovemen(cid:220)
tioned  rights  can  be  exercised.

4.(cid:218)(cid:217)The  ECB  may  delegate  to  the  national  central
banks  the  execution  of  the  tasks  to  which  the  previous
paragraphs  refer.  In  accordance  with  Article  34.1,  first
indent,  of  the  Statute,  the  ECB  shall  be  empowered  to
specify  further 
in  a  regulation  the  conditions  under
which  the  right  to  verify  may  be  exercised.

Article  7

Sanctions  in  cases  of  non(cid:220)compliance

1.(cid:218)(cid:217)Where  an  institution  fails  to  hold  all  or  part  of  the
minimum  reserves 
this
Regulation  and  ECB  regulations  or  decisions  associated
herewith,  the  ECB  may  impose  either  of  the  following
sanctions:

in  accordance  with 

imposed 

(a)(cid:217)a  payment  of  up  to  five  percentage  points  above  the
ESCB’s  marginal 
lending  rate  or  two  times  the
ESCB’s  marginal  lending  rate,  in  both  cases  applied

to  the  amount  of  the  minimum  reserves  which  the
relevant  institution  fails  to  provide;

(b) the  requirement 

for 

institution 

the  relevant 

to
establish  a  non(cid:220)interest(cid:220)bearing  deposit  with  the  ECB
or  the  national  central  banks  up  to  three  times  the
amount  of  the  minimum  reserves  which  the  relevant
institution  fails  to  provide.  The  maturity  of  the
deposit  shall  not  exceed  the  period  during  which  the
institution  fails  to  hold  the  minimum  reserves.

2.(cid:218)(cid:217)Whenever  a  sanction  is  imposed  in  accordance  with
Article  7(1),  the  principles  and  procedures  set  out  in  the
Council  Regulation  (EC)  concerning  the  powers  of  the
European  Central  Bank  to  impose  sanctions  shall  apply
with  the  following  modifications:

(a)(cid:217)the  ECB  shall  give 

the  undertaking  concerned
written  notification  of  the  decision  of  its  Executive
Board;

(b) Article  2(1)  and  (3)  and  Article  3(1),  (2),  (3)  and  (4)
of  the  Council  Regulation  (EC)  concerning  the
powers  of  the  European  Central  Bank  to  impose
sanctions  shall  not  be  applicable,  and  the  periods
referred  to  in  Article  3(5),  (6)  and  (7)  of  that  Regu(cid:220)
lation  shall  be  reduced  to  15  days.

3.(cid:218)(cid:217)Where  an  institution  fails  to  comply  with  the  obli(cid:220)
gations  deriving  from  this  Regulation  or  ECB  regulations
or  decisions  associated  therewith,  other  than  those  set
out  in  paragraph  1,  sanctions  in  cases  of  such  failure  and
the  limits  and  conditions  relating  to  the  imposition  of
such  sanctions  are  set  out  in  the  Council  Regulation
(EC)  concerning  the  powers  of  the  European  Central
Bank  to  impose  sanctions.

Article  8

Final  provisions

This  Regulation  shall  enter  into  force  on  1  January  1999.

This  Regulation  shall  be  binding 
directly  applicable  in  all  Member  States.

in 

its  entirety  and