ECB Weighs Doubling Bank Reserve Requirements to Curb Interest Costs

The potential shift would require banks to hold a higher proportion of customer deposits in unremunerated accounts. By increasing mandatory reserves, the Eurosystem could reduce its annual interest bill by nearly €4 billion. Currently, the ECB and national central banks pay 2.25% interest on approximately €2.16 trillion in excess liquidity, resulting in annual outlays of roughly €48.7 billion.

While the proposal has yet to reach the Governing Council for formal discussion, the internal debate reflects growing sensitivity toward the central bank’s balance sheet. Persistent losses limit the ability of institutions like Germany's Bundesbank to transfer dividends to state coffers, creating political pressure. Though the ECB’s primary mandate remains inflation control, the current liquidity surplus—a legacy of a decade of bond-buying programs—has rendered the interest expense a significant fiscal concern. A final decision on the adjustment is expected by the autumn.