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Decision (EU) 2019/1743 of the European Central BankShow full title
Decision (EU) 2019/1743 of the European Central Bank of 15 October 2019 on the remuneration of holdings of excess reserves and of certain deposits (recast) (ECB/2019/31)
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Decision (EU) 2019/1743 of the European Central Bank
of 15 October 2019
on the remuneration of holdings of excess reserves and of certain deposits (recast) (ECB/2019/31)
THE GOVERNING COUNCIL OF THE EUROPEAN CENTRAL BANK,
Having regard to the Treaty on the Functioning of the European Union, and in particular the first indent of Article 127(2) thereof,
Having regard to the Statute of the European System of Central Banks and of the European Central Bank, and in particular the first indent of Article 3.1 and Articles 17 to 19 thereof,
Whereas:
(1) Decision ECB/2014/23(1) has been substantially amended(2). Since further amendments are to be made, that Decision should be recast in the interests of clarity.
(2) The Governing Council may adjust the remuneration on all or part of institutions’ holdings of excess reserves. On 12 September 2019, the Governing Council decided to introduce a two-tier system for excess reserve remuneration, which exempts part of institutions’ excess liquidity holdings, i.e. reserve holdings in excess of required reserves, from negative remuneration at the rate applicable on the deposit facility. In particular, the Governing Council decided to exempt a multiple of institutions’ required reserves. The Governing Council decided to set the initial multiplier ‘m’ of the institutions’ required reserves used to calculate the exempt part of institutions’ holdings of excess reserves to six for all eligible institutions and the initial interest rate applicable to the exempt holdings of excess reserves to zero percent. This multiplier ‘m’ and the interest rate applicable to the exempt holdings of excess reserves can be changed over time by the Governing Council.
(3) The decision to introduce a two-tier system for excess reserve remuneration aims to support the bank-based transmission of monetary policy, while preserving the positive contribution of negative interest rates to the accommodative stance of monetary policy and to the continued sustained convergence of inflation to the aim of the European Central Bank (ECB). The two-tier system thus ensures that the costs of negative rates to institutions do not interfere with the smooth, predominantly bank-based transmission of monetary policy throughout the euro area,
HAS ADOPTED THIS DECISION:
(1)
Decision ECB/2014/23 of 5 June 2014 on the remuneration of deposits, balances and holdings of excess reserves (OJ L 168, 7.6.2014, p. 115).
(2)
See Annex I.
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