In the minimum reserve system of the ECB, the reserve ratio will be rather small and reserve requirements will be fully remunerated. The reserve ratio will be set at between 1.5% and 2.5% and will be applied to the deposits, debt securities and money market paper issued by credit institutions, except for residual maturities above two years.
Reserve holdings will be remunerated up to the required reserve level, at the rate of the ESCB’s main refinancing operation (as averaged over a month). It may be argued that a less than full remuneration of minimum reserves would increase the interest rate elasticity of central bank money demand.