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Unification of the remunerated and the non-remunaterated components of bank's required reserves with the Bank of Greece

16/02/2000 - Press Releases

The Monetary Policy Council of the Bank of Greece, by its Act No. 30/14 February 2000, amended the provisions governing the system of reserve requirements on credit institutions, with a view to:

  • enhancing the efficiency of credit institutions' liquidity management in view of the start of the HERMES system for the real-time settlement of payments in drachmas;
  • adjusting the operational framework of required reserves to that used by the European System of Central Banks.

Specifically:

  • The distinction between the remunerated and the non-remunerated component of reserves is eliminated; as from the start of the HERMES system, total holdings on reserve accounts will be remunerated at a single rate;
  • Credit institutions, as long as they fulfill the reserve requirement on average during a maintenance period of one month, will continue to be able to manage freely a part of their reserve holdings equal to up to 15 per cent of their respective reserve requirements and may use it also for the settlement of payments in the context of HERMES, once it becomes operative.
  • The interest rate applicable to credit institutions' reserve holdings with the Bank of Greece will be determined by a decision of the Monetary Policy Council and will correspond to the mean of the rates currently applicable to the existing two components (i.e. the remunerated and the non-remunerated component).

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