ECB reply to written question QZ-004/2025 submitted by Bas Eickhout MEP "ECB policy on commercial bank reserves held at the Eurosystem"

Christine LAGARDE President Mr Bas Eickhout Member of the European Parliament European Parliament 60, rue Wiertz B-1047 Brussels Re: Your letter (QZ-004) ECB-PUBLIC Frankfurt am Main, 25 April 2025 CL/L/25/124 Honourable Member of the European Parliament, dear Mr Eickhout, Thank you for your letter on central bank reserves held by the euro area banking system, which was passed on to me by Ms Aurore Lalucq, Chair of the Committee on Economic and Monetary Affairs, accompanied by a cover letter dated 13 March 2025. In March 2024 the Governing Council of the European Central Bank (ECB) decided to make changes to the ECB’s operational framework for implementing monetary policy. These changes were announced against the backdrop of a decline in the amount of central bank reserves in the euro area banking system, due to the end of our targeted longer-term refinancing operations and the gradual reduction of our monetary policy portfolios. Central bank reserves continue to decline as the Eurosystem reduces its balance sheet. At one stage in the future, the level of reserves may start to approach the level that the euro area banking system seeks to hold on a more structural basis. At this point in time, additional central bank reserves will be needed again. In order to offer an effective, flexible and stable source of liquidity to the banking system, the Eurosystem intends to provide these reserves through a broad mix of instruments. At this...