The charge, announced by MNB Deputy Governor Márton Nagy today, will put the excess reserves on equal footing with the central bankʼs O/N deposits, on which banks also have to pay 0.05% interest from March 23.
The step will encourage banks to find other targets – in the MNBʼs stated intention, government security investments – for their excess liquidity than simply leaving the excess on their accounts.
Before yesterdayʼs rate cut, the O/N deposit rate was 0.1%, attractive compared to the zero interest on excess money on banksʼ MNB accounts.
The MNB narrowed the corridor for interbank interest rates together with a surprise 15 bps base rate cut yesterday. It reduced the O/N deposit rate by 15 bps to a negative 0.05% and cut the O/N collateralized loan rate to 1.45% from 2.1%.
The MNB pays banks the prevailing base rate – 1.2% from March 23 – on their mandatory reserves, and it charges a punitive rate, also equal to the base rate, for any reserves shortfall.
The mandatory reserve rate has been 2% since December 1. Previously, banks had the option of choosing their own mandatory reserve rate among 2 to 5% every six months.
Banks have to meet their reserves obligation on a monthly average basis.
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