Tiering partially exempts excess reserves of the euro area banks from the negative deposit facility rate (-0.5%). It applies within the limit of an amount equal to six times their minimum reserves. Banks whose excess reserves do not exceed this multiple may, in addition, convert all or part of their deposit facility into excess reserves. The amount of the deposit facility of the 19 banking systems in the euro zone decreased by 59% between September and December 2019, falling back to its spring 2016 level.
We estimate that tiering reduces the cost of negative interests by EUR 4.0 bn in the euro area and EUR 825 m in France[1]. The annual cost of negative interest amounts to EUR 4.7 bn for the euro area banks, including EUR 3.5 bn attributable only to excess reserves and EUR 1.1 bn to the deposit facility. While it offers a relevant vision of the hierarchy of costs between banking systems, our calculation provides only an immediate view, taking into account only direct costs. Taking into account each one’s net interbank position, most often of the same sign as the balance of transactions with the Eurosystem, tends to amplify the results obtained.
Estimated annual cost of negative interest for the main banking systems in the euro area 
