# Required minimum reserve

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- Post ID: 587357
- Modified: 2023-07-25T21:12:35+00:00
- Language: en

## Definition

At the ECB, the amount of minimum reserves required to be held by each institution is first calculated by applying to the amount of liabilities subject to reserve requirements the reserve ratio of the corresponding category of liabilities (reserve base) on the basis of the balance sheet data as of the end of each calendar month. Subsequently, each institution deducts from this amount an allowance of currently EUR 100,000. - For the first time in recent central bank history, the ECB charged a negative interest rate of 0.1 percent in May 2014 for banks' reserve balances at the central bank that exceed the minimum reserve requirement. This is intended to discourage institutions from parking money safely at the central bank instead of lending it out to customers. If, of course, banks cannot find customers with whom repayment of extended loans is secured, they will engage in the stock and real estate markets, which increases the risk of bubbles in these markets. - See reserve surplus, penalty interest rate. - For the level of the rates, see the annex "Euro area statistics," heading "Monetary statistics" in the respective ECB Monthly Bulletin and the "Notes" at the end of the statistical section; ECB Monthly Bulletin, February 2008, p. 77 (the main task of the minimum reserves is to keep money market rates stable on the basis of average fulfillment during each reserve maintenance period); ECB Monthly Bulletin, March 2012, p. 47 (overview of banks' balances with the ECB in excess of the minimum reserves since 2007). Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

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