Minimum reserve requirement

Institutions subject to minimum reserve requirement

The Bank of Albania requires all banks and branches of the foreign banks licensed by Bank of Albania, operating within the territory of the Republic of Albania and having accounts on the payment system of the Bank of Albania, to hold minimum reserves.

Banks which meet the basic criteria (being granted a licence by the Bank of Albania and have accounts in its payment system), but which are subject to winding-up proceedings, are excluded from the minim reserve requirements. Also, banks, whose license has been revoked, are excluded from the minimum reserve requirements.


a. Reserve base

The reserve base of a bank is composed of deposits denominated in Albanian lek and foreign currency.  The foreign currency reserve base consists of dollar and euro liabilities. Euro reserve base includes liabilities in the European currency and in every other currency, except American dollar, converted in Euro using the fix exchange rate of Bank of Albania in the last day of reserve base period.

For banks subject to minimum reserve requirements, the balance sheet data at the end of the month are used to determine the reserve base for the maintenance period starting in the next calendar month.

Bank of Albania requires banks to report the balance sheet accounting data according to the frequency, to the format and within the time limit determined by the statistical reporting framework.

b. Reserve ratio

Reserve ratio is the percentage of the required reserve base held at the Bank of Albania.  Actually, this reserve ratio is 10%.  Bank of Albania may change the minimum reserve ratio upon the decision of the Supervisory Council.  Changes in the reserve ratio are announced by the Bank of Albania 30 days prior to the first maintenance period for which the change is effective.

c. Calculation of minimum reserve requirements

The reserve requirement for the holding period of each individual bank is calculated by applying the reserve ratio to the amount of eligible liabilities.


Each bank must hold its minimum reserves in the reserve accounts at the Bank of Albania.  The maintenance period is one month. It starts on the 24th calendar day of the month following the base reporting period, and ends on the 23rd calendar day of the following month.


During the maintenance period, banks may use only the minimum reserve in Lek, provided that the average of the reserve balance on the last day of the maintenance period does not fall below the required reserve level.

The level of reserves, used on daily basis by the banks is expressed as a percentage and it is decided by the Bank of Albania’s Supervisory Council. The ratio is announced 30 days prior to the effective maintenance period.  Actually the ratio is 40 per cent of the minimum required reserves.


Bank of Albania remunerates holdings of minimum reserves in national and foreign currency.  The remuneration is paid on the next business day following the end of the maintenance period.

Bank of Albania’s Supervisory Council decides the rates of interest for the remuneration of the minimum reserves. Banks are notified at least 30 (thirty) business days prior to the start of the maintenance period.

Minimum reserves in Lek are remunerated at 70% of the key policy rate approved by the Supervisory Council of the Bank of Albania on the last day of the base period.  The remuneration rate of the minimum reserves in USD is 0%, while minimum reserve in EUR is remunerated at the same level of ECB deposit.


The minimum reserve data are reported according to a predetermined format, frequency and deadlines. The last day for reporting the minimum reserve is the 15th calendar day of each month.  Bank of Albania checks the accuracy of data reported by the banks


Non-compliance with the minimum reserve requirements arises if:

Commercial bank's average balance on its reserve account in Lek over the maintenance period is less than its reserve requirement for the corresponding maintenance period.

Commercial bank’s balances on its reserve accounts in Euro and/or American dollar are less than the respective reserve requirements on the first day of the holding period.

In case Bank of Albania verifies a discrepancy of 1.000 (one thousand) Lek (or the equivalent amount on Euro and USD), between the reserve data reported and the data resulted from the reported balance sheet or from bank’s on-site inspection.

In the case the bank fails to comply with the reporting deadline, the required reserve level is determined 10 % higher than the required reserve level at the preceding maintenance period. In any case this amount cannot exceed Lek 700 million (or the equivalent amount in Euro and USD).  In the case the real but not the reported level of required reserves, verified by Bank of Albania after the beginning of the holding period, results higher than the level specified above, the bank is subject to the same penalties as in the case of erroneous reporting.

The sanctions currently applied for non-compliance with the minimum reserve requirements are:

In the event of non-compliance with Lek minimum reserves:

It is applied a penalty rate of 600 (six hundred) basis points above the Bank of Albania’s policy rate on the last day of the reserve base period, but not more than twice the Bank of Albania’s policy rate.

In the event of non-compliance with USD minimum reserves:

It is applied a penalty rate of 200 (two hundred) percentage points above the Federal Reserve key interest rate on the last day of the reserve base period, but not more than twice the Bank of Albania’s policy rate.

In the event of non-compliance with EUR minimum reserves:

It is applied a penalty rate of 200(two hundred)  percentage points above the European Central Bank key interest rate on the last day of the reserve base period, but not more than twice the Bank of Albania’s policy rate.

Besides the financial sanctions, every serious infringement of the minimum reserve requirements regulation, implies a violation of Law on Commercial Banks and is subject to other sanctions provided by this Law.

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