Six people said the European Central Bank is considering raising the minimum
reserve banks must hold in non-interest-bearing accounts from 1% to 2% of
customer deposits and other funding sources. The move is aimed at cutting the
ECB’s interest expenses from paying interest on excess deposits, absorbing
surplus liquidity and easing side-effects of its anti-inflation policy.
Officials said it would help cash-rich national central banks such as Germany’s
Bundesbank reduce losses tied to interest paid on deposits that exceed legal
requirements. Excess deposits have swelled to trillions of euros since the ECB’s
bond-buying programmes. The proposal is under early internal discussion and will
be revisited in this year’s framework review; a decision is expected before
autumn and the Governing Council has not formally debated it.
