Free Trial

MNI BRIEF: ECB Tweaks Gov't Deposit Rules To Smooth Markets

(MNI) London

Euro area government deposits held at the central bank will be remunerated at the short-term rate (€STR) minus 20 basis points from 1 May 2023, the European Central Bank announced Tuesday, citing repo market fragility, persistent collateral scarcity and excess liquidity concerns as the reason to amend the current arrangement, due to expire on 30 April 2023, with an updated scheme.

“This decision reflects the desire to encourage market intermediation, with the changes to the remuneration regime providing incentives for depositors to gradually phase out their holdings with the Eurosystem,” a statement said.

“The Governing Council will continue to monitor money market developments and the evolution of these deposit holdings, and it stands ready to make further adjustments to the remuneration regime if necessary.”

MNI London Bureau | +44 20 3983 7894 |
MNI London Bureau | +44 20 3983 7894 |

To read the full story



MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.