Opinion of the European Central Bank of 8 November 2018 on the minimum reserve requirements of the Magyar Nemzeti Bank (CON/2018/48)
Date: 2018-11-08
Institutions: European Central Bank
Subjects: Hungary, credit institution, electronic banking, electronic money, monetary policy, payment system

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 8 November 2018 

on the minimum reserve requirements of the Magyar Nemzeti Bank 

(CON/2018/48) 

Introduction and legal basis 

On  3  September  2018  the  European  Central  Bank  (ECB)  received  a  request  from  the  Magyar  Nemzeti 

Bank (MNB)  for  an opinion on a draft decree of the Governor of the Magyar Nemzeti Bank (hereinafter 

the ‘draft decree’) amending the MNB decree on the calculation, the method of allocation and placement 

of the minimum reserves (hereinafter the ‘MNB decree’). On 16 October 2018, the ECB received a further 

request from the MNB on supplemental provisions contained in the draft decree. 

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/EC1, as the draft decree 

relates  to  draft  legislative  provisions  on  the  instruments  of  monetary  policy  of  a  Member  State  whose 

currency is not 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. 

1. 

Purpose of the draft decree 

1.1  The MNB decided in 2016 to launch an instant payment system in Hungary on 1 July 2019 with the 

intention  to  make  payments  available  between  Hungarian  payment  accounts  within  5  seconds, 
24 hours a day, seven days a week and 365 days a year.2 GIRO Zrt., a company wholly owned by 

the  MNB,  will  develop  the  central  infrastructure  for  the  system  and  provide  for  the  clearing  and 

settlement of transactions between payment service providers. The system will ensure instant and 

final  settlement  of  payments  between  payment  service  providers  by  pre-funding  payment  orders 

using deposits made by the payment service providers into a ‘custody account’ opened by the MNB 
and operated by GIRO Zrt.3. 

1.2  The draft decree amends the MNB decree to take into account this development in the context of 

the MNB’s minimum reserves system. Under the draft decree, a credit institution may fully or partly 

include its share in the funds held in the custody account in its minimum reserve holdings. The draft 

decree provides that if a credit institution wishes to comply with its minimum reserve requirements 

in this manner, it is required to notify to the MNB the amount of its custody account balance that it 

intends to use for this purpose. 

1  

2  
3  

Council  Decision  98/415/EC  of  29  June  1998  on  the  consultation  of  the  European  Central  Bank  by  national 
authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 
MNB decree 35/2017 (XII. 14.). 

See the website of the MNB at www.mnb.hu. 

 
 
 
                                                 
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1.3  The draft decree also introduces provisions regulating the manner in which the MNB may modify 

the previously determined required reserves when a credit institution modifies its statistical balance 

sheet after the preliminary determination of the reserve requirement. 

1.4  The  draft  decree  also  repeals  certain  provisions  of  the  MNB  Decree  on  the  requirements  of 
business regulations and other regulations in respect of payment system operators4, which provide 

that  the  prices  applied  by  GIRO  Zrt.  have  to  be  set  for  each  service  provided  by  it  in  a  way  that 

enables participants to decide whether they wish to use the given service.  

2. 

General observations 

2.1  The  ECB  understands  that,  under  the  instant  payment  system  proposed  by  the  MNB,  each 

participant can decide at the end of each day which portion of its custody account balance is to be 

considered as fulfilling its minimum reserve requirements. The amount communicated to the MNB 

by  each  participant  for  the  purpose  of  fulfilling  its  minimum  reserve  requirements  would  be 

remunerated at the MNB interest rate applicable to holdings of reserve requirements, i.e. the base 

rate. Any remaining amount of the custody account balance pertaining to a participant in excess of 

those counted as reserve holdings would not be regarded as excess reserves, which are currently 

remunerated  at  the  MNB’s  overnight  deposit  facility  rate  minus  15  basis  points.  As  a  necessary 

precondition for the above arrangements, the ECB understands that GIRO Zrt. would report to the 

MNB  each  participant’s  share  in  the  total  balance  of  the  custody  account.  The  ECB  understands 

that this set-up is aimed at supporting the liquidity management of the banking sector following the 

introduction of the instant payment system. 

2.2  The ECB has noted in earlier opinions5 that Member States whose currency is not the euro retain 
their powers in the field of monetary policy according to national law6. In those opinions, the ECB 

noted that, once the euro is introduced, Hungary’s monetary policy will need to be consistent with 

the Eurosystem’s operational framework and credit institutions should therefore be familiar with the 

requirements that would apply to them once the single monetary policy is implemented in Hungary. 

2.3  The  treatment  of  funds  held  in  a  central  bank  account  in  relation  to  the  operation  of  an  instant 

payment  system  for  the  purpose  of  applying  minimum  reserve  requirements  is  necessarily 

determined  by  the  monetary  policy  framework  of  the  relevant  central  bank,  as  well  as  by  the 

features of the particular instant payment solution. In this respect, instant payments are a relatively 
new development7. Developments in the area of instant payments are dynamic due to continuous 

innovation  in  the  payments  industry.  Central  banks  are  involved  in  ongoing  dialogue  with 

stakeholders  from  the  payments  industry  and  facilitate  instant  payments  solutions,  inter  alia  by 

providing services supporting the settlement of instant payments. In the euro area, the Eurosystem 

has  been  involved  in  facilitating  the  emergence  of  instant  payments,  in  order  to  foster  innovation 

4  
5  

6  

7  

MNB decree 34/2009 (XII. 28.). 

See ECB Opinion CON/2010/68, ECB Opinion CON/2015/39 and ECB Opinion CON/2016/56. All ECB opinions are 
available on the ECB’s website at www.ecb.europa.eu. 

Article  282(4)  of  the  Treaty  and  Article  42.2  of  the  Statute  of  the  European  System  of  Central  Banks  and  of  the 
European Central Bank. 
See  ‘Instant  Payments  –  a  Winning  Bet?’  available  on 
www.europeanpaymentscouncil.eu. 

the  European  Payments  Council’s  website  at 

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and  integration  in  this  field.  In  2017,  the  Eurosystem  introduced  a  service  supporting  the 

emergence  of  instant  payments,  a  new  settlement  procedure  for  ancillary  systems  known  as 
‘settlement  procedure  6  real-time’8.  Also,  in  2017  the  ECB  decided  to  develop  the  new  TARGET 

Instant  Payment  Settlement  (TIPS)  service,  which  will  enable  the  settlement  of  individual  instant 

payment orders in central bank money 24 hours a day, seven days a week and 365 days a year, 

with  immediate  or  close  to  immediate  processing.  TIPS  is  scheduled  to  start  operating  in 
November 20189. 

2.4  As  regards  the  amendments  to  the  rules  for  pricing  of  services  provided  by  GIRO  Zrt.,  the  ECB 

understands that in the future GIRO Zrt. could set a ‘package-based’ fee for the use of the services 

it offers, and would thus no longer be required to apply prices for each of its services separately. 

The ECB notes that according to the Principles for financial market infrastructures (PFMI) issued by 

the  Committee  on  Payment  and  Settlement  Systems  and  the  International  Organization  of 
Securities Commissions10, financial market infrastructures should in principle publicly disclose their 

fees for the individual services that they offer, with the aim to enable  participants to compare the 

costs to those of alternative arrangements. Against this background, the ECB understands that the 

MNB,  as  the  overseer  of  payment  systems  in  Hungary,  assessed  the  application  of  a  package-

based fee against the PFMI as unproblematic, in the absence of alternative arrangements. 

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

Done at Frankfurt am Main, 8 November 2018. 

[signed] 

The President of the ECB 

Mario DRAGHI 

8  

9  
10  

Guideline (EU) 2017/2082 of the European Central Bank of 22 September 2017 amending Guideline ECB/2012/27 
on a Trans-European Automated Real-time Gross settlement Express Transfer system (TARGET2) (ECB/2017/28) 
(OJ L 295, 14.11.2017, p. 97). 
For further information, see the ECB website at https://www.ecb.europa.eu. 

See the website of the Bank for International Settlements at https://www.bis.org/cpmi/publ/d101a.pdf. 

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