Adjustment of the reserve requirement framework of the Bank of Greece to that of the Eurosystem
30/06/2000 - Press Releases
To ensure the timely and full adjustment of monetary policy instruments
in Greece to those used by the European Central Bank and euro area national central banks
(the Eurosystem), the reserve requirement framework of the Bank of Greece is adjusted by
Act 37/30 June 2000 of the Monetary Policy Council.
The adjustment concerns all aspects regarding the method of calculation
and the maintenance of required reserves. The new system will enter into force on 10 July
2000, to enable credit institutions to familiarise themselves with it in time, as well as
to ensure the effective fulfilment of their obligations to the Eurosystem from 1 January
Moreover, owing to significant differences between the new and the
current system, especially as regards the level of the reserve ratio, the above-mentioned
Act of the Monetary Policy Council includes special transitional provisions, aimed at
preventing large and sudden changes in liquidity conditions in the interbank money market.
More specifically, according to Act 37/30 June 2000 of the Monetary
1. The reserve base is adjusted so as to be identical to that adopted by the European
Central Bank in accordance with Regulation 2818/98. The categories of liabilities included
in the reserve base are detailed in Bank of Greece Governor's Acts 2458/1 March 2000 and
2463/13 June 2000.
2. Reserve ratios are determined by category of liabilities and replace the single
reserve ratio (12 per cent) applying currently. The general ratio is set at 2 per cent,
with the exception of the following categories of liabilities, for which a 0 per cent
ratio will apply:
- deposits with agreed maturity over two years;
- deposits redeemable at notice over two years;
- debt securities with agreed maturity over two years.
3. Maintenance period starts on the 24th calendar day of each month and ends on the
23rd calendar day of the following month, instead of the currently effective period (10th
calendar day of each month to the 9th calendar day of the following month).
4. A lump-sum allowance in drachmas, equivalent to EUR 100,000 and calculated according
to the conversion rate of the drachma (1 euro = 340.75 GRD), is deducted from the total
reserve requirements of each credit institution.
5. Credit institutions are entitled to utilize on a daily basis, the total amount of
their reserve requirements (against a ceiling of 15 per cent on the amount they were
entitled to raise so far), provided they comply with the averaging provision (maintenance
of required reserves on an average monthly basis). This arrangement contributes to
smoothing out daily fluctuations in short-term interbank market rates and reduces the need
for central bank interventions to this end.
6. With effect from 24 October 2000, the Postal Savings Bank is also included in the
reserve requirement system. Mortgage banks are also subject to the new, unified system.
7. With effect from 10 July 2000, foreign currency deposits subject to the provisions
of Bank of Greece Governor’s Act 2358/25 April 1995 (deposits of Greek seamen and
workers) will come under the new, unified reserve requirement system, while the relevant
rate of redeposits with the Bank of Greece (stipulated in the above Governor’s Act, as
applicable) is reduced to 58 per cent, from 60 per cent. The transitory regime relevant to
the above deposits will be determined by a special Act of the Monetary Policy Council.
8. To achieve a smooth and controlled increase in liquidity, the Bank of Greece will
gradually release the amount by which already existing required reserves exceed those
derived from the new, lower reserve ratio. The amounts to be gradually released will be
kept as time deposits maturing in 6, 12 and 18 months, with the exception of an amount
equal to 10 per cent of the total, which will be returned to banks on 3 January 2001.
These time deposits will be remunerated at market rates, i.e. at the rate applied by the
European Central Bank for its main refinancing operations. In cases where the European
Central Bank applies the multiple rate auction procedure, the above time deposits will be
remunerated at the corresponding marginal tender rate.