Opinion of the European Central Bank of 2 July 2013 on reserve requirements in connection with the introduction of the euro (CON/2013/47)
Date: 2013-07-02
Institutions: European Central Bank
Subjects: Eurosystem, Latvia, credit institution, euro, foreign-exchange reserves, monetary policy

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 2 July 2013  

on reserve requirements in connection with the introduction of the euro 

(CON/2013/47) 

Introduction and legal basis 

On  21  May  2013,  the  European  Central  Bank  (ECB)  received  a  request  from  Latvijas  Banka  for  an 

opinion  on  (a)  a  draft  regulation  amending  the  Regulation  on  calculating  and  fulfilling  the  minimum 

reserve  requirements  for  credit  institutions  (hereinafter  the  ‘draft  amending  regulation’),  (b)  a  draft 

regulation  on  the  preparation  of  the  calculation  of  the  reserve  base  and  reserve  requirement  for  credit 

unions (hereinafter the ‘draft regulation on credit unions’), and (c) a draft regulation on the preparation of 

the calculation of the reserve base and reserve requirement (hereinafter the ‘draft regulation on minimum 

reserves’) (hereinafter collectively referred to as the ‘draft regulations’). 

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 regulations relate 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 regulations 

The draft amending regulation provides for a transitional period for credit institutions by extending the 

last reserve maintenance period prior to the introduction of the euro in Latvia and by introducing a new 

calculation of minimum reserves, based on that used for the Eurosystem’s minimum reserve system. 

The draft regulation on credit unions introduces transitional provisions for calculating the reserve base of 

credit  unions  and  lays  down  the  reserve  requirements  for  the  initial  maintenance  periods  following  the 

date of the introduction of the euro in Latvia. 

The draft regulation on minimum reserves will repeal both of the abovementioned regulations, resulting 

in a single regulation that consolidates Latvian law on reserve requirements. It will enter into force on the 

date when the Council of the European Union has abrogated the derogation granted to Latvia pursuant to 

Article 140(2) of the Treaty. 

1  

OJ L 189, 3.7.1998, p. 42.  

 
 
 
 
 
                                                 
ECB-PUBLIC 

2. 

General observations 

2.1  The  ECB  welcomes  the  changes  to  Latvian  law  that  will  be  brought  about  under  the  draft 

regulations  as  part  of  the  preparations  for  the  introduction  of  the  euro  in  Latvia.  Within  the 

framework  of  monetary  policy,  which  remains  a  competence  of  Latvijas  Banka  until  the 

introduction  of  the  euro,  the  draft  regulations  will  align  the  current  Latvian  minimum  reserve 
system  with  the  Eurosystem  standards  that  will  apply  after  the  introduction  of  the  euro2,  a 

necessary step identified in previous ECB opinions on Latvijas Banka’s reserve requirements. 

2.2  The  ECB  considers  that  the  provisions  preparing  for  the  application  of  reserve  requirements  to 

credit unions are timely and appropriate. This temporary legislation should help Latvian institutions 

to  familiarise  themselves  with  the  Eurosystem’s  requirements  and  ensure  a  smooth  transition  to 

compliance with the Eurosystem minimum reserve system from the date of abrogation of Latvia’s 

derogation. Once Latvia introduces the euro, the draft regulation on minimum reserves will apply 

with  the  result  that  minimum  reserves  will  be  calculated  and  notified  in  line  with  Regulation 
ECB/2003/9 of the European Central Bank on the application of minimum reserves3. 

2.3  Once the Council decides to abrogate Latvia’s derogation4, the ECB may, in the coming months, 

decide  to  introduce  specific  arrangements  for  the  transitional  period  as  institutions  in  Latvia 

become subject to the ECB’s minimum reserve system. It is envisaged that these arrangements will, 

inter  alia,  establish  both  a  transitional  maintenance  period  for  institutions  located  in  Latvia  and 

transitional provisions for other euro area institutions subject to reserve requirements in relation to 

their liabilities towards such Latvian institutions. 

This opinion will be published on the ECB’s website.  

Done at Frankfurt am Main, 2 July 2013. 

[signed] 

The President of the ECB 

Mario DRAGHI 

2  

3  
4  

With respect to the ECB’s comments on the current Latvian minimum reserve system, see ECB Opinions CON/2006/11, 
CON/2008/89, CON/2010/18, CON/2010/77 and CON/2012/16. All ECB opinions are published on the ECB’s website at 
www.ecb.europa.eu. 
OJ L 250, 2.10.2003, p. 10. 
This is expected with effect from 1 January 2014. 

2