above the minimum reserve requirements over monthly periods of time. this will allow the banking system to absorb liquidity shocks easily. the volatility of money market rates will, as a consequence, be reduced. also, fine tuning operations will not have to be used frequently, which will mean that markets are less affected by central bank interventions than they would otherwise be. the second objective of the minimum reserve system is to enlarge the demand for central bank money, so as to enlarge the liquidity deficit of the banking system vis - a - vis the european system of central banks. this will safeguard the role of the european system of central banks as a key provider of liquidity to the banking system. in the minimum reserve system of the ecb, the reserve ratio will be rather small and reserve requirements will be fully remunerated. the reserve ratio will be set at between 1. 5 % and 2. 5 % and will be applied to the deposits, debt securities and money market paper issued by credit institutions, except for residual maturities above two years. reserve holdings will be remunerated up to the required reserve level, at the rate of the escb ’ s main refinancing operation ( as averaged over a month ). it may be argued that a less than full remuneration of minimum reserves would increase the interest rate elasticity of central bank money demand. this notwithstanding, the european central bank has decided in favour of a full remuneration of minimum reserves in order to avoid the potential distortions to fair and efficient markets that a less than full remuneration could have implied. as a result, the minimum reserve system is unlikely to lead to any delocation of certain parts of the reserve base, hence of savings. finally, it may also be useful to note that the european central bank has also decided not to exempt any credit institution of the euro area from the minimum reserve system. 4. conclusion i am confident that the policy of the ecb has always been, and will continue to be, guided by the principle of equal treatment, the desire to foster the development of financial markets in the euro area and the need to avoid undue shifts in economic activity. this will also contribute to providing an adequate environment for an efficient allocation of savings in the euro area.

policy, while at the same time being as neutral as possible with regard to financial structure. the neutrality and, indeed, market - friendliness, of the ecb ’ s framework is apparent in a variety of ways. first, neutrality is apparent in the way open market operations are conducted. almost all of the ecb ’ s open market operations will be executed through tenders, to which a broad spectrum of counterparties may submit bids. this will be a transparent and fair process. fine tuning open market operations may also be conducted through tenders, the so - called “ quick ” tenders. the ecb and the national central banks will aim at giving the opportunity to participate in fine tuning operations to all counterparties having an appropriate track record of activity in the money market, if necessary on a rotating basis. second, the consideration of neutrality has been a driving factor in the process of establishment of the list of eligible assets. eligible assets are the assets which counterparties have to post as guarantees for any credit received from the european system of central banks. the list of eligible assets comprises a wide variety of assets, which have been selected by the ecb according to area - wide uniform criteria relating to their credit standing in the whole euro area. in order to promote a certain degree of continuity at the start of the third stage of european monetary union, a sub - set ( the so - called tier two eligible assets ) includes assets of particular importance for certain national banking systems of the euro area. these assets have the same credit standing as the other assets. for monetary policy operations, counterparties will be able to use any eligible assets, irrespective of where they are located in the euro area. to this end, national central banks will act as correspondents for each other so as to make cross - border use possible also for assets for which this service is not yet provided by securities settlement systems. for the record, one may also mention the ecb ’ s system of risk control measures. risk control measures will ensure that the amount of assets provided is always sufficient. when designing its system of risk control measures, the ecb has paid careful attention to the best market practices in this area. finally, and perhaps most importantly, the minimum reserve system of the ecb has been developed so as to be as neutral as possible. the minimum reserve system has two main objectives. the first objective is to stabilise money market interest rates. this will be achieved by requesting that average reserve holdings be