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)

Holdings of reserves of institutions subject to Article 2 of Regulation (EC) No 1745/2003 of the European Central Bank (ECB/2003/9)⁽¹⁾ exceeding the reserves required pursuant to Council Regulation (EC) No 2531/98⁽²⁾ and Regulation (EC) No 1745/2003 (ECB/2003/9) (hereinafter ‘excess reserves’) shall be remunerated at zero percent or the deposit facility rate, whichever is lower.

A part of an institution’s holdings of excess reserves on the institution’s reserve accounts as defined in Articles 1 and 6 of Regulation (EC) No 1745/2003 (ECB/2003/9) up to a multiple of the institution’s required reserves (hereinafter the ‘allowance’) shall be exempt from the remuneration rule set out in paragraph 1. The multiplier ‘m’ used to calculate the allowance and the interest rate applicable to the exempt holdings of excess reserves shall be specified by the Governing Council and subsequently published on the ECB’s website. Any adjustment to the multiplier ‘m’ and/or to the interest rate applicable to the exempt holdings of excess reserves shall apply from the maintenance period following the announcement of the Governing Council’s decision, unless specified otherwise. The exempt holdings of excess reserves shall be determined on the basis of the average end-of-calendar-day balances over a maintenance period in the institution’s reserve accounts, as defined in Articles 1 and 6 of Regulation (EC) No 1745/2003 (ECB/2003/9). Holdings with the Eurosystem’s deposit facility shall not be considered excess reserves.

The interest due or earned on exempt and non-exempt holdings of excess reserves shall be deducted by debiting the relevant institution’s reserve accounts, or as the case may be, paid, on the second NCB business day following the end of the maintenance period over which the interest was calculated.

In the case of institutions which hold required reserves through an intermediary pursuant to Article 10 or 11 of Regulation (EC) No 1745/2003 (ECB/2003/9), the allowance shall be calculated as set out in this paragraph. The multiplier ‘m’ used to calculate the allowance shall be applied on the aggregate required reserves to be maintained by the relevant intermediary institution on behalf of itself and all institutions for which it maintains required reserves pursuant to Article 10 or 11 of Regulation (EC) No 1745/2003 (ECB/2003/9). The interest rate applicable to the exempt holdings of excess reserves shall apply only to excess reserves held on the reserve accounts as defined in Articles 1 and 6 of Regulation (EC) No 1745/2003 (ECB/2003/9) of the relevant intermediary.

Accounts maintained with the ECB in accordance with Decision ECB/2003/14⁽³⁾, Decision ECB/2010/31⁽⁴⁾, Decision ECB/2010/17⁽⁵⁾ and Council Regulation (EU) 2020/672⁽⁶⁾ shall be remunerated as follows:

1. if the deposit facility rate on the relevant calendar day is zero or higher (positive), at zero per cent or the euro short-term rate (€STR), whichever is lower;

2. if the deposit facility rate on the relevant calendar day is lower than zero (negative), at the deposit facility rate or the euro short-term rate (€STR), whichever is lower.

However, when deposits need to be held in those accounts in advance of the date on which a payment must be made in accordance with the legal or contractual rules applicable to the relevant facility, such deposits shall be remunerated during this advance period at zero per cent or the euro short-term rate (€STR), whichever is higher.

The dedicated account maintained with the ECB in accordance with Article 13(2) of Commission Implementing Decision of 14 April 2021 establishing the necessary arrangements for the administration of the borrowing operations under Council Decision (EU, Euratom) 2020/2053 and for the lending operations related to loans granted in accordance with Article 15 of Regulation (EU) 2021/241 of the European Parliament and of the Council⁽⁷⁾ for the purposes of prudential cash holdings as referred to in that Article shall be remunerated at zero per cent or the euro short-term rate (€STR), whichever is higher, except where the aggregate amount of deposits held in that dedicated account exceeds EUR 20 billion, in which case the amount in excess shall be remunerated as follows:

1. if the deposit facility rate on the relevant calendar day is zero or higher (positive), at zero per cent or the euro short-term rate (€STR), whichever is lower;

2. if the deposit facility rate on the relevant calendar day is lower than zero (negative), at the deposit facility rate or the euro short-term rate (€STR), whichever is lower.

Decision ECB/2014/23 is hereby repealed.

References to the repealed Decision shall be construed as references to this Decision and shall be read in accordance with the correlation table set out in Annex II.