ECB mulls doubling reserve requirements

The European Central Bank is currently discussing a proposal to double the mandatory reserve ratio that banks are required to hold on customer deposits, in an effort to cut costs associated with high liquidity interest rates and to reduce financial losses resulting from elevated debt interest payments. If this proposal is approved, reserve requirements will increase from 1% to 2%, which will help decrease the annual interest expense estimated at around 48.7 billion euros. The goal is to ease financial pressure on central banks and achieve greater economic stability in the Eurozone. The final decision is expected to be announced by next autumn.

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