VIEW: Commerzbank Stick With No Quick Fix Call Re: MRR

Commerzbank write “with regard to banks' minimum reserve requirements (MRR), the news flow over the holiday period adds weight to our view that there is unlikely to be a quick fix, and probably no major increase in the longer term.”

• “In a speech ECB’s Schnabel said that the MRR "is not an effective way of compensating the remuneration of excess liquidity," highlighting the distortions that would result from higher reserve requirements.”
• “Also, the EBA published an analysis just before Christmas calculating that a hypothetical increase in the MRR to 4%, combined with the remaining TLTRO repayments, would reduce the LCR of large banks by 22 percentage points from the 152% reported at the end of June 2023.”