Regulation (EC) No 2818/98 of the European Central Bank of 1 December 1998 on the application of minimum reserves (ECB/1998/15)
Date: 1998-12-01
Institutions: European Central Bank
Subjects: European Central Bank, European System of Central Banks, central bank, financial institution, financial regulation, foreign-exchange reserves

30. 12. 98

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Official Journal of the European Communities

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I

(Acts whose publication is obligatory)

REGULATION (EC) No 2818/98 OF THE EUROPEAN CENTRAL BANK

of 1 December 1998

on the application of minimum reserves

(ECB/1998/15)

THE GOVERNING COUNCIL OF THE EUROPEAN
CENTRAL BANK,

HAS ADOPTED THIS REGULATION:

Having regard to the Statute of the European System of
Central Banks and of the European Central Bank (herein-
after referred to as ‘the Statute') and in particular Article
19.1 thereof,

Having regard to Council Regulation (EC) No 2531/98 of
23 November 1998 concerning the application of
minimum reserves by the European Central Bank (1),

Having regard to Council Regulation (EC) No 2532/98 of
23 November 1998 concerning the powers of the Euro-
pean Central Bank to impose sanctions (2),

if the
Whereas Article 19.1 of the Statute states that,
European Central Bank (ECB) decides to require credit
institutions established in participating Member States to
hold minimum reserves, they are to be held on accounts
with the ECB and participating national central banks
(participating NCBs); whereas it is considered appropriate
that such reserves should be held on accounts with parti-
cipating NCBs;

in order to be effective,

the instrument of
Whereas,
minimum reserves also requires specification regarding
the calculation and maintenance of reserve requirements
and the reporting and verification rules;

Whereas, for the exclusion of interbank liabilities from
the reserve base, any standardised deduction to be applied
for liabilities with a maturity of up to two years within the
debt securities category and for money market paper
should be based on the euro area-wide macro ratio
between the stock of relevant instruments issued by credit
institutions and held by other credit institutions and by
the ECB and participating NCBs, on the one hand, and
the total amount outstanding of such instruments issued
by credit institutions, on the other,

(1) OJ L 318, 27. 11. 1998, p. 1.
(2) OJ L 318, 27. 11. 1998, p. 4.

Article 1

Definitions

For the purposes of this Regulation:

— ‘participating Member State'

shall mean an EU
Member State which has adopted the single currency
in accordance with the Treaty,

— ‘participating national central bank'

(participating
NCB) shall mean the national central bank of a
participating Member State,

— ‘institution' shall mean any entity in a participating
Member State which the ECB, under the terms of
Article 19.1 of
the Statute, may require to hold
minimum reserves,

— ‘reserve account' shall mean an institution’s account
with a participating NCB, the end-of-day balance of
which counts towards fulfilment of the institution’s
reserve requirement,

— ‘reserve requirement' shall mean the requirement for
institutions to hold minimum reserves on reserve
accounts with participating NCBs,

— ‘reserve ratio' shall mean the percentage specified in
Article 4 for any particular item in the reserve base,

— ‘maintenance period' shall mean the period over
which compliance with reserve requirements is calcu-
lated and for which such minimum reserves must be
held on reserve accounts,

— ‘end-of-day balance' shall mean the balance at the
point in time when the finalisation of payment activ-
ities and entries related to possible access to the
standing facilities of the European System of Central
Banks (ESCB) has taken place,

— ‘NCB business day' shall mean any day on which a
particular participating NCB is open for the purpose
of conducting ESCB monetary policy operations,

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— ‘resident' shall mean any natural or legal person
residing in any of the participating Member States in
the sense of Article 1(4) of the Council Regulation
(EC) No 2533/98 of 23 November 1998 concerning
the collection of statistical information by the Euro-
pean Central Bank (1),

— ‘reorganisation measures' shall mean measures which
are intended to preserve or restore the financial situa-
tion of an institution and which could affect third
including measures
rights,
pre-existing
parties’
involving the possibility of
suspension of
the
payments, suspension of enforcement measures or
reduction in claims,

— ‘winding-up proceedings'

shall mean collective
proceedings concerning an institution which neces-
sarily involve intervention by the judicial authorities
or any other competent authority of a participating
Member State with the aim of realising assets under
including
those
the
instances in which the proceedings are terminated by
a composition or by another analogous measure.

supervision of

authorities,

Article 2

Institutions subject to reserve requirements

The following categories of

1.
subject to reserve requirements:

institutions shall be

(a) credit institutions as defined in the first indent of
Article 1 of Council Directive 77/780/EEC (2), other
than participating NCBs;

(b) branches of credit institutions as defined in the first
indent of Article 1 of Council Directive 77/780/EEC,
other than participating NCBs; these include branches
of credit institutions which have neither their regis-
tered nor their head office in a participating Member
State.

Branches of credit institutions established in participating
Member States which are located outside participating
Member States are not subject to reserve requirements.

The ECB may exempt

2.
the following institutions
from reserve requirements on a non-discriminatory basis:

(a)

institutions which are subject to winding-up proceed-
ings or reorganisation measures;

(b) institutions for which the purpose of

the ESCB’s
minimum reserve system would not be met by
In
imposing
reaching a decision on any such exemption, the ECB
will take into account one or more of the following
criteria:

requirements upon them.

reserve

(i) the institution is pursuing special-purpose func-

tions;

(ii) the institution is not exercising active banking
functions in competition with other credit insti-
tutions;

(iii) the institution has all its deposits earmarked for
purposes related to regional and/or international
development assistance.

The ECB will publish a list of institutions subject to
3.
reserve requirements. The ECB will also publish a list of
institutions exempt
from its reserve requirements for
reasons other than being subject to reorganisation meas-
ures. Institutions may rely on these lists when deciding
whether their liabilities are owed to another institution
that is itself subject to reserve requirements. These lists
shall not be determinative of whether institutions are
subject to reserve requirements in accordance with this
Article 2.

Article 3

Reserve base

The reserve base of an institution shall comprise the
1.
(as defined within the reporting
following liabilities
framework for the money and banking statistics of the
ECB, which is laid down in Regulation (EC) No 2819/98
the European Central Bank of 1 December 1998
of
concerning the
the
consolidated balance
monetary financial institutions sector (ECB/1998/16)) (3)
resulting from the acceptance of funds:

sheet of

(a) deposits;

(b) debt securities issued;

(c) money market paper.

The following liabilities shall be excluded from the

2.
reserve base:

liabilities which are owed to any other institution not
listed as being exempt from the ESCB’s minimum reserve
system according to Article 2(3) and liabilities which are
owed to the ECB or to a participating NCB. For the
application of this provision, the institution shall be able
to provide evidence to the relevant participating NCB of
the actual amount of its liabilities owed to any other
institution not listed as being exempt from the ESCB’s
minimum reserve system and of its liabilities which are
owed to the ECB or to a participating NCB in order to
exclude them from the reserve base. If such evidence
cannot be presented for debt securities issued with an
agreed maturity of up to two years, the institution may
apply a standardised deduction to the outstanding amount
of its debt securities issued with an agreed maturity of up
to two years from the reserve base. If such evidence
cannot be presented for money market paper, the institu-
tion may
standardised deduction to the
outstanding amount of its money market paper liabilities
from the reserve base. The amount of such standardised
deductions will be published by the ECB in the same
manner as the publication of the list referred to in Article
2(3).

apply

a

(1) OJ L 318, 27. 11. 1998, p. 8.
(2) OJ L 322, 17. 12. 1977, p. 30.

(3) See page 7 of this Official Journal.

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The reserve base in respect of a particular main-
3.
tenance period shall be calculated by the institution on
the basis of the latest data to be reported by the institu-
tion to the relevant participating NCB before the start of
the relevant maintenance period as defined within the
reporting framework for the money and banking statistics
of the ECB, which is laid down in Regulation (EC) No
2819/98.

Article 4

Reserve ratios

1. A reserve ratio of 0 % shall apply to the following
liability categories (as defined within the reporting frame-
work for the money and banking statistics of the ECB,
which is laid down in Regulation (EC) No 2819/98

(a) deposits with agreed maturity over two years;

(b) deposits redeemable at notice over two years;

(c) repos;

(d) debt securities issued with an agreed maturity over two

years.

2. A reserve ratio of 2,0 % shall apply to all other
liabilities included in the reserve base.

Article 5

Calculation of reserve requirements

1.
The amount of minimum reserves to be held by each
institution in respect of a particular maintenance period
shall be calculated by applying the reserve ratios to each
relevant
the reserve base for that period, as
defined in Article 4.

item of

2. An allowance of EUR 100 000, to be deducted from
the amount of the reserve requirement, shall be granted to
each institution, subject to the provisions contained in
Article 11.

than the amount defined in accordance with Article 5 for
that period.

3.
If an institution has more than one establishment in
a participating Member State, the registered office or head
office, if located in that Member State, shall be respon-
sible for ensuring fulfilment of the institution’s reserve
requirement. If the institution has neither a registered
office nor a head office in that Member State, it shall
designate which branch in that Member State shall be
responsible for ensuring fulfilment of the institution’s
reserve requirement. All reserve holdings of these estab-
lishments count together towards fulfilment of the insti-
tution’s total reserve requirement in that Member State.

Article 7

Maintenance period

The maintenance period shall be one month, starting on
the 24th calendar day of each month and ending on the
23rd calendar day of the following month.

Article 8

Remuneration

1. Holdings of required reserves are remunerated at the
the
average,
taken over
rate (weighted according to the number of
ESCB’s
calendar days)
the main refinancing operations
for
according to the following formula:

the maintenance period, of

H
t

· n
t

Rt

=

MRi
· 100

n
t

n

· S

i = l
360

Article 6

Reserve holdings

1. An institution shall hold its minimum reserves on
one or more reserve accounts with the national central
bank in each participating Member State in which it has
an establishment, in relation to its reserve base in the
corresponding Member State. Reserve accounts shall be
denominated in euro. Institutions’ settlement accounts
with the participating NCBs may be used as reserve
accounts.

Where:

Rt =remuneration to be paid on holdings of required
reserves for the maintenance period t

Ht

nt

i

=holdings of

required reserves

for

the main-

tenance period t

=number of calendar days in the maintenance

period t

=i th calendar day of the maintenance period t

MRi =marginal interest rate for the most recent main
refinancing operations spanning calendar day i.

2. An institution shall have complied with its reserve
requirement
the average end-of-day balance on its
reserve accounts over the maintenance period is not less

if

2.
The remuneration shall be paid on the second NCB
business day following the end of the maintenance period
over which the remuneration was earned.

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Article 9

Responsibility for verification

The right to verify the accuracy and quality of the infor-
mation which institutions provide to demonstrate compli-
ance with the reserve requirement as specified in Article 6
of Regulation (EC) No 2531/98 concerning the applica-
tion of minimum reserves shall be exercised by the parti-
cipating NCBs without prejudice to the right of the ECB
to exercise this right itself.

Article 10

Indirect holding of minimum reserves through an
intermediary

1. An institution may apply for permission to hold all
its minimum reserves indirectly through an intermediary
which is resident in the same Member State. The inter-
mediary shall be an institution subject to reserve require-
ments which normally effects part of the administration
(e.g. treasury management) of the institution for which it
is
intermediary, beyond the holding of
acting as
minimum reserves.

2.
The application for permission shall be addressed to
the national central bank of the participating Member
State in which the institution making the application is
established. The application shall include a copy of an
agreement between the intermediary and the applicant in
which both parties express their consent to the arrange-
ment. The agreement shall also specify whether the insti-
tution making the application wishes to access ESCB
standing facilities and open market operations. The agree-
ment shall have an agreed period of notice of at least 12
months. Upon fulfilment of the above conditions the
participating NCB referred to above may grant permis-
sion for the period of time for which the aforementioned
agreement between the parties is operative, subject to the
provisions of paragraph 4 of this Article. Such permission
shall become effective from the start of the first main-
tenance period following the granting of the permission.

3.
The intermediary shall maintain these minimum
reserve holdings in accordance with the general condi-
tions of the ESCB’s minimum reserve system. The inter-
mediary shall, in addition to the institutions for which it
is acting as intermediary, be responsible for compliance
with their reserve requirements. In the event of non-
compliance, the ECB may impose any applicable sanc-
tions on the intermediary, on the institution for which it
is acting as intermediary, or on both, in accordance with
the liability for non-compliance.

The ECB or the relevant participating NCB may, at
4.
any time, withdraw permission to hold minimum reserves
indirectly if an institution which holds its reserves indir-
ectly through an intermediary, or the intermediary itself,

if

for

the conditions

fails to comply with its obligations under the ESCB
minimum reserve system,
the
holding of reserves indirectly specified in paragraphs 1
and 2 of this Article are no longer fulfilled or for pruden-
tial reasons related to the intermediary. If such permission
is withdrawn for prudential reasons related to the inter-
mediary,
the withdrawal may have immediate effect.
Subject to the requirements of paragraph 5 of this Article,
any withdrawal for other reasons shall take effect at the
end of the current maintenance period. An institution
which holds its reserves through an intermediary, or the
intermediary itself, may, at any time, ask for the permis-
sion to be withdrawn. Withdrawal requires prior noti-
fication by the relevant participating NCB to become
effective.

5.
The institution which holds its minimum reserves
through an intermediary and the intermediary itself will
be informed of any withdrawal of permission for reasons
other than prudential ones at least five working days
before the end of the maintenance period within which
permission shall cease to be granted.

to the

individual

6. Without prejudice
statistical
reporting obligations of the institution which holds its
minimum reserves through an intermediary, the inter-
mediary shall report the reserve base data in a sufficiently
detailed manner to enable the ECB to verify their accu-
racy and quality, subject to the provisions contained in
Article 9, and determine the respective reserve require-
ments and the reserve holdings data for itself, as well as
for each institution for which it acts as intermediary.
These data shall be provided to the participating NCB at
which the minimum reserves are held. The intermediary
shall provide the aforementioned reserve base data
according to the same frequency and timetable as were
established within the reporting framework for the money
and banking statistics of the ECB, which is laid down in
Regulation (EC) No 2819/98.

Article 11

Reserve holding on a consolidated basis

Institutions allowed to report statistical data as a group on
a consolidated basis (as defined within the reporting
framework for the money and banking statistics of the
ECB, which is laid down in Regulation (EC) No 2819/98)
must, subject to the provisions contained in Article 10,
hold minimum reserves through one of the institutions in
the group which is acting as intermediary exclusively for
these institutions. The institution acting as the inter-
mediary for the group may apply to the ECB for exemp-
tion from the provisions in paragraph 6 of Article 10. If
its application is accepted by the ECB, only the group as
a whole shall be entitled to receive the allowance referred
to in paragraph 2 of Article 5.

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Article 12

NCB business days

Article 14

Amendments to this Regulation

If one or more branches of a participating NCB are
closed on an NCB business day owing to local or regional
bank holidays,
the relevant participating NCB shall
inform the institutions in advance of the arrangements to
be made for transactions involving those branches.

Article 13

Any amendments to this Regulation shall become effec-
tive only with regard to a full maintenance period and
shall be announced prior to this period.

Article 15

Final provision

Transitional provisions

This Regulation shall enter into force on 1 January 1999.

The first maintenance period shall start on l January

1.
1999 and end on 23 February 1999.

2.
The reserve base of an institution for the first main-
tenance period shall be defined in relation to elements of
its balance sheet as of 1 January 1999, as reported to the
participating NCBs within the reporting framework for
the money and banking statistics of the ECB, which is
laid down in Regulation (EC) No 2819/98.

Done at Frankfurt am Main, 1 December 1998.

On behalf of the Governing Council of
the ECB

The President

Willem F. DUISENBERG