Circular BCL 1999/157 of 17 December 1999 — Revision of the uniform deduction percentage from the reserve base

Postal Address: L-2983 Luxembourg
Head Office: 2, boulevard Royal
Tel.: (352) 4774-1 Fax: (352) 4774-4901 e-mail: direction@bcl.lu Luxembourg, 17 December 1999

To all credit institutions

CIRCULAR BCL 99/157
Revision of the uniform deduction percentage from the reserve base

Madam, Sir,

We have the honour to refer to Circular BCL 98/152 regarding the introduction of a mandatory reserve system in Luxembourg, to inform you of a modification to the calculation methods for reserve requirements.

In accordance with point 2.2 "Reserve Base and Reserve Coefficients" of the aforementioned Circular BCL 98/152, the liabilities of a credit institution vis-à-vis other credit institutions subject to the Eurosystem's mandatory reserve system ("interbank liabilities") are excluded from the reserve base. To benefit from this provision, credit institutions must prove the existence of their interbank liabilities. However, if a credit institution is unable to provide proof of the existence of its interbank liabilities in the form of debt securities with an initial maturity of two years or less or money market instruments, the European Central Bank authorizes it to apply a uniform deduction percentage to the aforementioned liabilities (cf. Circular BCL 98/152 of 6 November 1998 concerning the introduction of a mandatory reserve system and Article 3.2 of European Central Bank Regulation (EC) No 2818/98 of 1 December 1998 concerning the application of mandatory reserves (ECB/1998/15)).

Postal Address: L-2983 Luxembourg
Head Office: 2, boulevard Royal
Tel.: (352) 4774-1 Fax: (352) 4774-4901 e-mail: direction@bcl.lu

At its meeting on 2 December 1999, the Governing Council of the European Central Bank decided to increase the uniform deduction from the reserve base applicable to debt securities with an initial maturity of two years or less and money market instruments from 10% to 30%. This decision will take effect as of the determination of the mandatory reserve amount for the maintenance period beginning on 24 January 2000.

Please accept, Madam, Sir, the assurance of our most distinguished sentiments.

CENTRAL BANK OF LUXEMBOURG

Serge KOLB Andrée BILLON Yves MERSCH
General Director