Among potential ways to reduce the excess liquidity in the banking system, the ECB is reportedly considering increasing the minimum reserve requirements (MRR). Several ECB policymakers are said to be in favour of a move higher in MRRs to 3% or even to 4%. Both the Belgian central bank’s Pierre Wunch and the ECB’s Pablo Hernández de Cos have indicated they do not see “strong arguments” for this, or see this as “obvious” while the Bundesbank’s Joachim Nagel has indicated he would support a move higher. Currently, banks have to meet a 1% minimum reserve requirement on average during the reserve maintenance period. The 1 ... (full story)