The European Central Bank is weighing a return to a policy it abandoned over a decade ago. Sources say policymakers are actively discussing whether to raise the minimum reserve ratio from 1% to 2%, with a decision expected this autumn.
If that sounds like a small number, here’s the thing: that single percentage point shift could pull approximately €165 billion in excess liquidity out of the euro area banking system.
What’s actually on the table
The minimum reserve ratio determines how much cash commercial banks must park at the central bank relative to their deposits.
The ratio was originally set at 2% when the euro launched in 1999. Then the sovereign debt crisis hit, and the ECB cut it in half to 1% in January 2012, hoping cheaper liquidity would encourage banks to lend more freely. That emergency-era setting has remained in place ever since.
On June 11, 2026, the ECB raised key interest rates by 25 basis points, pushing the deposit facility rate to 2.25%. Rising inflation, partly driven by the Middle East conflict, has kept the central bank in tightening mode.
Changes to excess reserves remuneration also took effect on June 17, 2026, aligning those rates with the deposit facility rate. The current remuneration on excess reserves sits at 0%, which already squeezes bank profitability on idle cash. Doubling the reserve requirement would compound that pressure considerably.
Why banks should be nervous
Roughly €165 billion in excess liquidity would effectively be removed from the system. That’s money banks can no longer deploy for loans, securities purchases, or other revenue-generating activities. Banks would need to either reduce lending, sell assets, or find alternative funding sources to meet the higher requirement.
What this means for crypto and digital assets
In May 2026, the ECB rejected proposals to ease liquidity requirements for euro-denominated stablecoin issuers. That decision, combined with potentially tighter reserve requirements, creates a distinctly unfriendly environment for euro stablecoins.
Stablecoin issuers typically hold reserves in traditional banking infrastructure. Higher reserve requirements mean banks may charge more for the services stablecoin issuers depend on, or offer less favorable terms for holding reserve assets.