Reserve Management Service
The euro is the second most important reserve currency worldwide behind the US dollar. In order to give central banks outside the Eurosystem as well as international organisations and monetary authorities access to the various euro financial markets, the range of central bank services provided by the Bundesbank includes offering its customers the possibility of opening a bank account and setting up a safe custody account. On this basis, our customers have the option to make use of additional financial services. This means that they can manage their euro reserves at the Bundesbank in a way that is tailored to their individual requirements.
Further information on our services can be found here:
- Account management and payment transactions
- Account remuneration through automated overnight deposits
- Fixed-term deposits
- Safe custody account management
- Securities trading
- Securities lending
- Passive portfolio management
- Forex trading
Account management and payment transactions
Having a euro account at the Bundesbank allows international organisations, central banks and monetary authorities to participate in the European cross-border payment system TARGET2. The account is held on a credit balance basis and forms the basis for the other services which are offered. There is no need to maintain a given minimum credit balance. Accounts are remunerated as described under “Account remuneration through automatic overnight deposits” and “Fixed-term deposits”.
For more information, please refer to Product Annex Basic Services, section I. Giro transactions and account management.
Account remuneration through automated overnight deposits
There is a three-tier remuneration of accounts: tier 1 investment, tier 2 investment and excess balances.
Tier 1 investment
If the ECB interest rate on the deposit facility is negative, tier 1 remuneration will be the higher of Eonia less 10 basis points and the ECB deposit facility rate. If the interest rate on the deposit facility is equal to or above 0%, the remuneration rate will be the higher of Eonia less 10 basis points or 0%. In both cases, remuneration of the account is limited to a customer-specific maximum investment amount (tier 1 limit).
Tier 2 investment
We offer overnight deposits at selected credit institutions to further increase the average remuneration of our customers’ accounts. The Bundesbank acts in this context as an agent. The amount of this tier 2 investment is customer-specific. You have the option to set a maximum amount or to arrange for amounts below your tier 1 investment limit to be invested in the market. Tier 2 investments are remunerated at the actual average rate of interest on investments less a margin of 5 basis points. In the best interest of our customers, we naturally forgo an investment if the available market rate means that the investment is not economically efficient. We select only banks with a high credit rating as our counterparties.
If the deposit facility rate is negative, remuneration of any balances exceeding the tier 1 and tier 2 investment will be at the deposit facility rate less 15 basis points. If the deposit facility rate is equal to or above 0%, no interest will be paid on such account balances.
For more information, please refer to Product Annex Basic Services, section I, as well as Product Annex Investment Services, sections I and III.
We offer our customers two types of fixed-term deposits.
For customers seeking safe and risk-free fixed-term deposits, we provide them directly with the Bundesbank. We also offer investment of fixed-term deposits as an agent. This means that we invest time deposits with market partners (solely German credit institutions with a high credit rating).
Conditions for fixed-term deposits depend on the prevailing market conditions. To enquire about these, call us on +49 (0)69 9566 1600 or via Reuters Eikon Chat.
For more information, please refer to Product Annex Investment Services, sections II and IV.
Safe custody account management
We also offer our customers services related to the safe custody and management of securities in a safe custody account at the Bundesbank. Generally, we accept all securities listed in the ECB’s “Eligible Asset Database” (excluding liquidity categories 3 and 5). In addition to the securities listed in that database, we also hold shares of enterprises resident in the EU, provided that they can be delivered directly through Clearstream Banking Frankfurt or indirectly through its links with other CSDs. We would be pleased to consider individual cases upon request.
For more information, please refer to Product Annex Basic Services, section II.
In securities trading, our customers also have the option of purchasing or selling all eligible securities. They can choose between delivery versus payment (DVP) and free of payment (FOP).
In addition, our range of services includes participating in primary market auctions for German government bonds and those of other euro countries, such as France, Spain and the Netherlands.
For more information, please refer to Product Annex Investment Services, section V.
Not least the Eurosystem’s monetary policy purchase programmes have led to a marked rise in demand in the market for European government bonds. For institutional investors as well as central banks, monetary authorities and international organisation, this opens up the possibility of increasing the profitability of their securities portfolios by participating in securities lending programmes. We are the right people to talk to in this matter. In cooperation with central securities depository Clearstream Banking, we are able to offer our customers the possibility of participating in a fails lending programme (ASL) and a strategic lending programme (ASLplus).
Passive portfolio management
As our latest service, the Bundesbank is offering portfolio management to other central banks, international organisations and monetary authorities. This means that our customers can leverage our many years’ experience of managing and investing pension fund reserves and other special funds in the European financial market.
The passively managed portfolios track conservative and liquid benchmark indices. At present, we are offering the following investment options:
- Markit-iBoxx Eurozone-Index ex-BBB
- Markit-iBoxx Supranationals-Index
- Markit-iBoxx Supranationals 1-3-Index
- Markit-iBoxx Germany-Index
Markit-iBoxx Germany 1-3-Index
Our customers can determine the composition of the portfolio.
For more information, please refer to Product Annex Investment Services, section VIII as well as the Investment guidelines for ERMS portfolio management.
Forex trading customers of the Bundesbank may purchase and sell euro in return for the following currencies on a spot basis: AUD, CAD, CHF, CZK, DKK, GBP, HKD, HUF, JPY, LTL, NOK, NZD, PLN, SEK, SGD, USD, ZAR.
For more information, please refer to Product Annex Investment Services, section VII.