Minimum reserve remuneration rate remains at zero
Banca d'Italia has published updated interest rates for minimum reserves, confirming the remuneration rate on required reserves remains at zero since September 2023. The penalty rate for non-compliance currently stands at 4.90 percent.
Zero remuneration since September 2023
The Banca d'Italia, as part of the Eurosystem, has maintained a zero remuneration rate on required minimum reserves since September 20, 2023. This policy change ended the previous system where remuneration was calculated as the weighted average of the Eurosystem's deposit facility rates.
Prior to December 21, 2022, remuneration was linked to the weighted average of the marginal interest rates of the Eurosystem's main refinancing operations.
The current zero rate applies to all maintenance periods starting from the specified date, impacting how banks manage their liquidity within the Eurosystem framework.
This adjustment reflects broader monetary policy shifts aimed at streamlining the operational framework for minimum reserves.
Penalty rates for non-compliance
For banks failing to meet their minimum reserve requirements, a penalty rate is applied.
This rate is calculated as the weighted average, over the maintenance period, of the marginal lending facility rate, plus an additional 2.5 percentage points.
The latest published penalty rate stands at 4.90 percent for maintenance periods ending in February 2026. This rate has seen a gradual decrease from a peak of 7.25 percent observed in early 2024, reflecting the overall trend in Eurosystem interest rates.
The penalty mechanism ensures compliance with reserve requirements, supporting the smooth functioning of monetary policy operations.
A technical detail with broader implications
The zero remuneration rate on reserves, while technical, signals the Eurosystem's intent to streamline liquidity management.
This policy reduces incentives for holding excess reserves, potentially encouraging greater market activity.
However, the persistent high penalty rates reinforce strict compliance, balancing efficiency with prudential oversight.
Source: Interest rates concerning minimum reserves
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