Changes in the reserve requirement methodology as part of the programme of gradual harmonisation with ECB regulations

At its regular meeting on 9 August 2001, the CNB Bank Board decided to make further revisions to the reserve requirement methodology as part of the programme of gradual harmonisation with ECB regulations. Changes to specific parameters will be made in the following areas: the reserve base, the length of the maintenance period, the statistical documents used for the reserve requirement calculation, and the remuneration of reserve holdings. All the agreed changes take effect on 24 January 2002 and will bring the reserve requirements largely into line with the ECB standards binding for EMU member states.

Specifically, the changes involve the following methodological measures:

• The setting of a 0% reserve ratio on repo liabilities, which currently form part of the reserve base with a ratio of 2%. This item will remain in the reserve base definition, but the application of a zero ratio will de facto reduce the reserve requirement.
• The maintenance period over which compliance with the reserve requirement is assessed is to be extended from 14 days to a monthly cycle starting on the 24th calendar day of each month and ending on the 23rd calendar day of the following month. This will give commercial banks greater flexibility to manage their liquidity within each reserve cycle, as the assessment of compliance with the reserve requirement will remain based on averaging of end-of-day balances for the entire cycle. The statistical document used for the reserve requirement calculation will be a modified monthly balance sheet. This will simplify the calculation and reduce the number of statistical statements submitted, as the current base - the arithmetic mean of three 10-day stocks of primary liabilities - is to be replaced by the single stock of defined primary liabilities as of the end of the previous month according to the monthly balance sheet (this statement will also undergo changes as a result of the harmonisation of bank reporting with ECB standards).
• The required reserve holdings will be remunerated on the basis of the real average balances on settlement accounts over the cycle, with reserve holdings exceeding the required reserves not remunerated. The interest will be paid to banks on the second working day following the end of the maintenance period. At present, the interest is calculated for each day based on the closing balance on the reserve account (with reserve holdings exceeding the required reserves not remunerated). As from 24 January 2001, the option of irregular compliance over the course of the maintenance period will also be reflected in the remuneration.

Alice Frišaufová
CNB spokesperson