Bank of Lithuania

Minimum reserves – a requirement set for credit institutions established in Lithuania to hold a certain amount of funds at the central bank. It is one of the monetary policy instruments aimed at stabilising interbank money market interest rates and creating (or enlarging) a structural liquidity shortage.

Setting and application of reserve requirements

Application of minimum reserve requirements

The minimum reserve requirements are applied to credit institutions and foreign credit institution branches established in the Republic of Lithuania.

The list of credit institutions subject to minimum reserve requirements is published on the ECB website.

Reserve ratio Credit institutions are subject to a 1 per cent required reserve ratio.
Reserve base

Minimum reserves are calculated on the basis of the so-called reserve base, consisting of deposits and debt securities issued. If an institution has liabilities related to a branch of the same entity or to the head office or registered office of the same entity, which is located outside the participating Member States, it will include such liabilities in the reserve base. Credit institution liabilities with the ECB, NCBs within the Eurosystem and credit institutions that are subject to the minimum reserve requirements are excluded from the reserve base.

The amount of the reserve for a particular maintenance period is calculated by applying the reserve ratio set by the ECB. A reserve ratio of 0 per cent is applied to deposits with an agreed maturity of over 2 years, deposits redeemable at notice over 2 years, repos, and debt securities issued with an original maturity of over 2 years.

Reserve maintenance periods

The ECB publishes an indicative calendar of the Eurosystem reserve maintenance periods at least 3 months before the start of each calendar year (ECB website).

Calculation and maintenance of minimum reserves

The reserve base and amounts of credit institutions subject to MFI balance sheet full statistical reporting requirements, applied by the Bank of Lithuania, are calculated in respect of data for the month, two months prior to the month within which the maintenance period starts, of the last Bank of Lithuania-approved balance sheet statistical report of a credit institution.

Credit institutions not subject to full reporting requirements calculate the reserve base and amounts for two consecutive maintenance periods starting with the maintenance period in the third month after the end of a quarter, whose balance sheet data is used to calculate the reserve base.

Credit institutions must comply with the minimum reserve requirements and are to hold them on the Bank of Lithuania accounts in accordance with the established procedure.

To comply with the minimum reserve requirement, the average method is applied.

The Bank of Lithuania remunerates credit institutions for the reserve maintenance at the marginal interest rate applied for main refinancing operations settled in the reserves maintenance period.

Legal basis

Regulation (EC) No 1745/2003 of the European Central Bank of 12 September 2003 on the application of minimum reserves (ECB/2003/9) (and subsequent amendments) (ECB website).

Rules for the calculation of the credit institution reserve base and amount approved by Resolution No 03-168 of the Board of the Bank of Lithuania of 23 September 2014.

Last update: 24-04-2017