ECB & Minimum reserves: Opening Pandora’s box, again

研报英文原文证据摘录

ECB & Minimum reserves: Opening Pandora’s box, again

FICC Research

Interest Rates

1 July 2026

Europe: Money Markets

ECB & Minimum reserves: Opening

Pandora’s box, again

Reuters reported that the ECB is again debating doubling the Rohan Khanna

minimum reserve requirement for euro area banks to 2% +44 (0) 20 7773 0533

rohan.khanna1@barclays.com

from 1% currently. While this measure would reduce the Barclays, UK

ECB's interest expenses marginally, we don't think it will

come to pass given the ramifications for banks.

On Tuesday evening, from the sidelines of ECB's Monetary Policy Forum at Sintra, Reuters

reported that the ECB is considering doubling the minimum reserve requirement (MRR) for euro

area banks from 1% to 2% (of specific liabilities)1 . Citing six sources, Reuters reported that the

discussion was at an early stage and a formal decision is expected by the autumn, as a

discussion within the Governing Council had not yet taken place. We strongly believe that these

discussions are simply part of the review of the key parameters of the ECB's operational

framework for implementing monetary policy, which was already scheduled to take place this

year.

We think that, much like in 2024 when the Governing Council decided against increasing the

minimum reserve requirement when it outlined its new operational framework, it is likely to

leave the reserve requirement unchanged at 1%.

In what follows, using a Q&A format, we go back to basics on the topic of minimum reserves and

discuss the banking system and money market ramifications of a potential increase in

the MRR. For our previous work on this topic, see here and here.

Q1. What was the ECB's motivation behind establishing the minimum reserves framework?

A.