On Sep. 12, ECB issued decision on temporary adjustments to rules.
ECB issued Decision ECB/2022/30 on temporary adjustments to remuneration of certain non-monetary policy deposits held with national central banks and with ECB.
Follows ECB Feb. 2022 aligned remuneration of comparable deposits, see #130368.
Overview
Remuneration of government deposits to be subject to ceilings; for overnight deposits, unsecured overnight market rate; for fixed term deposits, secured market rate with a comparable maturity or if that is not available the unsecured overnight market rate.
On any calendar day, total sum of all government deposits, other than government deposits re adjustment program, held nationally linked to exceeding certain amounts.
I.e. sums higher of either equivalent of EUR 200 million; or 0,04 % GDP of State in which central bank is domiciled; those will be remunerated up to certain levels.
Deposits in euro, deposit facility rate/euro short term rate (€STR) whichever is lower.
Deposits in other currencies, approach comparable for concerned currency to approach set out for deposits denominated in euro, as set out above will be applied.
Government deposits re adjustment program will be subject to rates referred in pt a).
Or remunerated at 0% whichever higher, but not count towards threshold in point b).
For purposes of art 1 the definitions in art 2 of the Guideline 2019/671 will apply.
Art 2 sets rules for certain deposits held with ECB and remunerated in accordance with art 2 of Decision 2019/1743 and with art 5 of Decision ECB/2010/4.
Art 3 sets temporary derogation: in event of conflict between this decision and art 4.1 of Guide 2019/671, art 2 Dec 2019/1743 or art 5 Dec ECB/2010/4, this dec prevails.
Effectiveness
Decision enters into force on Sep. 14, 2022 and remains in force until Apr. 30, 2023.
Sep. 2022 Official Journal
On Sep. 13, 2022, ECB issued Dec 2022/1521 (ECB/2022/30) in Official Journal.
Jan. 2023 Official Journal
On Jan. 5, 2023, ECB issued Dec 2023/55 (ECB/2022/47) amending Dec 2019/1743 on the remuneration of holdings of excess reserves and of certain deposits.
And amending Dec 2022/1521 on temporary adjustments to the remuneration of certain non-monetary policy deposits held with national central banks and the ECB.
Following establishment of a single funding method ensuring parallel financing of all programs that rely on borrowing, dedicated account maintained with ECB is also to be used in context of this single funding method for purposes of prudential cash holdings related to Instrument for providing support to Ukraine (macro-financial assistance+).
The Council has decided that it is appropriate that the dedicated account maintained with the ECB continues to be remunerated on the basis of the rules and provisions laid down in ECB Dec 2019/1743 (ECB/2019/31) and ECB Dec 2022/1521 (ECB/2022/30).
Dec 2022/1521 will remain in force until Apr. 30, 2023; until that date, pursuant to Article 3 of that Decision, in the event of a conflict between it and, inter alia, Article 2 of Dec 2019/1743, Dec 2022/1521 prevails; thus, they are to be read in conjunction.
Decision in force on the day following its OJ publication; applies from Jan. 9, 2023.
Apr. 2023 Official Journal
On Apr. 17, 2023, ECB issued Dec 2023/817 of Apr. 5, 2023, amending Dec 2019/1743 on remuneration of excess reserves and certain deposits (ECB/2019/31) (ECB 2023/9).
To incorporate ECB Governing Council decision that remuneration of certain deposits held with ECB will be set at the euro short-term rate (€STR) minus 20 basis points.
Decision enters into force on 5th day after publication, shall apply from May 1, 2023.
Issued Guideline 2023/818 amending Guideline 2019/671 on domestic asset, liability management operations by national central banks (ECB/2019/7) (ECB/2023/8).
Also regarding the decision to set remuneration of certain deposits at the new rate.
Guideline takes effect on the day of its notification to the national central banks, who shall comply and apply the new requirements of Guideline from May 1, 2023.
May 2024 Official Journal
On May 3, 2024, ECB issued Dec 2024/1209 of Apr. 16, 2024, on remuneration of non-monetary policy deposits held with national central banks and European Central Bank.
Council has determined that deviations or exceptions from the main remuneration policy rate are necessary; the ceiling concept should continue to apply for the remuneration of government deposits and certain other non-monetary policy deposits.
So as to allow NCBs to remunerate such deposits at lower rate than the ceiling where, taking into account country-specific conditions in repurchase transactions market.
A lower spread than 20 basis points, initially set at zero, should apply in the case of guarantee funds held by European Economic Area financial market infrastructures such as payment systems, central counterparties and central securities depositories.
As well as for prefunded accounts held in TARGET, in view of the importance of these holdings for the smooth operation of payment systems and financial stability.
Funds that are required to be temporarily deposited with the NCBs or the ECB in relation to financial assistance should continue to be exempt from negative rates.
In order to achieve these objectives and in order to allow NCBs sufficient time to prepare for the application of the new remuneration policy to non-monetary policy deposits, this Decision should apply from Dec. 1, 2024.
In connection with the above, ECB also issued Gd 2024/1210 amending Gd 2019/671 on domestic asset and liability management operations by national central banks; and Gd 2024/1211 on provision of reserve management services in to central banks and countries located outside euro area, to international organizations (ECB/2024/13).
To ensure certainty, it is necessary to align application date of the guideline with date of application of Dec 2024/1209 (ECB/2024/11); guideline applies from Dec. 1, 2024.
Regulators
ECB
Entity Types
Bank
Reference
OJ L, 5/3/2024; Dec 2024/1209 (ECB/2024/11), Gd 2024/1210 (ECB/2024/12), Gd 2024/1211 (ECB/2024/13), 4/16/2024; OJ L 102/59, OJ L 102/56, 4/17/2023; OJ L 3/16, 1/5/2023; Dec 2023/55, ECB/2022/47, 12/16/2022; OJ LI 236/1, 9/13/2022; Dec 2022/1521, Dec ECB/2022/30, 9/12/2022; Dec 2019/1743 (ECB/2019/31); Gd 2019/671 (ECB/2019/7); Dec ECB/2010/4; Citation: Dec 2022/1521; Dec 2023/55; Dec 2023/817; Dec 2024/1209; Gd 2024/1210;
