ECB tends to keep critical reserve ratio constant

The European Central Bank (ECB) is inclined to keep the reserve ratio that Eurozone banks must park at the ECB without interest. According to sources familiar with the matter, the tendency to keep the Minimum Reserve Requirements (MRR) ratio at 1 percent ahead of the critical meeting to be held on Wednesday regarding the ECB’s monetary policy implementation has become dominant. Some hawkish members of the ECB were pushing for this ratio to be increased. However, an increase in this ratio would mean a blow to banks’ profitability rates. According to sources, although the ratio to be determined on Wednesday will remain at 1 percent, it has the potential to be changed in the future. Bank stocks rose rapidly on the news, with Deutsche Bank leading the rises with 1.95 percent. On Thursday last week, ECB President Christine Lagarde announced that they would evaluate the monetary policy implementation framework on March 13 and that the decision to be reached on the MRR ratio would be announced after the evaluation.