Minimum reserve remuneration at zero, penalty rates published

Banca d'Italia's latest publication confirms that the remuneration rate on holdings of required reserves has been set at zero percent since September 20, 2023.

This policy change marked a significant shift from previous periods where remuneration was linked to the Eurosystem's deposit facility rates or the marginal interest rates of its main refinancing operations.

The current framework ensures that financial institutions holding minimum reserves with the Eurosystem do not receive interest on these specific funds.

The document provides a detailed schedule of maintenance periods, extending through mid-2026, during which these rates apply.

This approach aligns with the broader Eurosystem strategy regarding reserve management, aiming to streamline liquidity conditions and potentially influence market behavior by removing the incentive to hold excess reserves.

The document also specifies the penalty rate applied for non-compliance with reserve requirements.

This rate is calculated as the weighted average of the marginal lending facility rate over the maintenance period, plus 2.5 percentage points.

For the most recent periods, this penalty rate has stood at 4.90 percent.

Historically, prior to September 20, 2023, the remuneration on required reserves was calculated as the weighted average of the Eurosystem's deposit facility rates.

Before December 21, 2022, it was linked to the marginal interest rates of the Eurosystem's main refinancing operations, reflecting evolving monetary policy tools and objectives over time.