diff --git a/Cargo.lock b/Cargo.lock
index 7872e4e3e3..af281e85d8 100644
--- a/Cargo.lock
+++ b/Cargo.lock
@@ -3777,6 +3777,7 @@ dependencies = [
  "hex-literal 0.3.4",
  "interbtc-primitives",
  "issue",
+ "itertools",
  "mocktopus",
  "module-btc-relay-rpc-runtime-api",
  "module-issue-rpc-runtime-api",
diff --git a/crates/escrow/src/lib.rs b/crates/escrow/src/lib.rs
index 38c010ada3..28d71c6ed3 100644
--- a/crates/escrow/src/lib.rs
+++ b/crates/escrow/src/lib.rs
@@ -196,7 +196,7 @@ pub mod pallet {
         /// Previous lock has expired.
         LockHasExpired,
         /// Lock amount is too large.
-        LockAmountTooLarge,
+        LockAmountTooLow,
         /// Insufficient account balance.
         InsufficientFunds,
         /// Not supported.
@@ -490,7 +490,7 @@ impl<T: Config> Pallet<T> {
         // total amount can't be less than the max period to prevent rounding errors
         ensure!(
             new_locked.amount >= T::BlockNumberToBalance::convert(T::MaxPeriod::get()),
-            Error::<T>::LockAmountTooLarge,
+            Error::<T>::LockAmountTooLow,
         );
 
         ensure!(
diff --git a/crates/escrow/src/tests.rs b/crates/escrow/src/tests.rs
index 1ca243fa21..a4b9567879 100644
--- a/crates/escrow/src/tests.rs
+++ b/crates/escrow/src/tests.rs
@@ -205,7 +205,7 @@ fn should_not_allow_amount_smaller_than_max_period() {
         <Balances as Currency<AccountId>>::make_free_balance_be(&ALICE, amount);
         assert_err!(
             Escrow::create_lock(Origin::signed(ALICE), amount, end_time),
-            TestError::LockAmountTooLarge
+            TestError::LockAmountTooLow
         );
     })
 }
diff --git a/standalone/runtime/Cargo.toml b/standalone/runtime/Cargo.toml
index dafdfe3d27..5c3f57d156 100644
--- a/standalone/runtime/Cargo.toml
+++ b/standalone/runtime/Cargo.toml
@@ -99,6 +99,7 @@ mocktopus = "0.7.0"
 serde_json = "1.0"
 pretty_assertions = "0.7.2"
 flate2= "1.0"
+itertools = "0.10.0"
 
 bitcoin = { path = "../../crates/bitcoin", default-features = false }
 
diff --git a/standalone/runtime/tests/mock/mod.rs b/standalone/runtime/tests/mock/mod.rs
index 7e36ef1e26..6139a2a44d 100644
--- a/standalone/runtime/tests/mock/mod.rs
+++ b/standalone/runtime/tests/mock/mod.rs
@@ -55,6 +55,7 @@ pub mod redeem_testing_utils;
 pub mod replace_testing_utils;
 pub mod reward_testing_utils;
 
+pub use itertools::Itertools;
 pub use pretty_assertions::assert_eq;
 
 pub type VaultId = DefaultVaultId<Runtime>;
@@ -355,7 +356,7 @@ pub fn iter_currency_pairs() -> impl Iterator<Item = DefaultVaultCurrencyPair<Ru
 }
 
 pub fn iter_collateral_currencies() -> impl Iterator<Item = CurrencyId> {
-    vec![Token(DOT), Token(KSM), ForeignAsset(1)].into_iter()
+    vec![Token(DOT), Token(KSM), Token(INTR), ForeignAsset(1)].into_iter()
 }
 
 pub fn iter_native_currencies() -> impl Iterator<Item = CurrencyId> {
@@ -1355,6 +1356,7 @@ impl ExtBuilder {
             .flat_map(|(account, balance)| {
                 iter_collateral_currencies()
                     .chain(iter_native_currencies())
+                    .unique()
                     .map(move |currency| (account.clone(), currency, balance))
             })
             .chain(iter_wrapped_currencies().map(move |currency| (account_of(FAUCET), currency, 1 << 60)))
diff --git a/standalone/runtime/tests/test_escrow.rs b/standalone/runtime/tests/test_escrow.rs
index 201bbed2bc..ecbd2ada61 100644
--- a/standalone/runtime/tests/test_escrow.rs
+++ b/standalone/runtime/tests/test_escrow.rs
@@ -52,6 +52,37 @@ fn integration_test_individual_balance_and_total_supply() {
     });
 }
 
+#[test]
+fn integration_test_lock_reserved() {
+    // check that locking does not touch the reserved balance
+    ExtBuilder::build().execute_with(|| {
+        let span = <Runtime as escrow::Config>::Span::get();
+        let current_height = SystemPallet::block_number();
+        let lock_amount = 1000_000_000_000_000;
+        let initial_free = 1500_000_000_000_000;
+        let initial_reserved = 500_000_000_000_000;
+
+        assert_ok!(Call::Tokens(TokensCall::set_balance {
+            who: account_of(ALICE),
+            currency_id: DEFAULT_NATIVE_CURRENCY,
+            new_free: initial_free,
+            new_reserved: initial_reserved,
+        })
+        .dispatch(root()));
+
+        assert_ok!(Call::Escrow(EscrowCall::create_lock {
+            amount: lock_amount,
+            unlock_height: current_height + span
+        })
+        .dispatch(origin_of(account_of(ALICE))));
+
+        let account = orml_tokens::Pallet::<Runtime>::accounts(account_of(ALICE), DEFAULT_NATIVE_CURRENCY);
+        assert_eq!(account.free, initial_free);
+        assert_eq!(account.reserved, initial_reserved);
+        assert_eq!(account.frozen, lock_amount);
+    });
+}
+
 fn ensure_reward_stake_is_escrow_balance(height: BlockNumber) {
     assert_ok!(
         <EscrowRewardsPallet as Rewards<AccountId, Balance, CurrencyId>>::get_stake(&account_of(ALICE)),
diff --git a/standalone/runtime/tests/test_vault_registry.rs b/standalone/runtime/tests/test_vault_registry.rs
index c89e2720b4..8a08e2a3c5 100644
--- a/standalone/runtime/tests/test_vault_registry.rs
+++ b/standalone/runtime/tests/test_vault_registry.rs
@@ -94,6 +94,42 @@ mod deposit_collateral_test {
         });
     }
 
+    #[test]
+    fn integration_test_vault_registry_lock_additional_using_locked_tokens_fails() {
+        ExtBuilder::build().execute_with(|| {
+            let vault_id = VaultId::new(account_of(VAULT), DEFAULT_NATIVE_CURRENCY, DEFAULT_WRAPPED_CURRENCY);
+
+            let currency_id = vault_id.collateral_currency();
+
+            let amount_1 = 1000_000_000_000_000;
+
+            let mut vault_data = default_vault_state(&vault_id);
+            *vault_data.free_balance.get_mut(&currency_id).unwrap() = Amount::new(amount_1, currency_id);
+            CoreVaultData::force_to(&vault_id, vault_data);
+
+            let q = currency::get_free_balance::<Runtime>(currency_id, &vault_id.account_id);
+            assert_eq!(q.amount(), amount_1);
+
+            let span = <Runtime as escrow::Config>::Span::get();
+            let current_height = SystemPallet::block_number();
+
+            assert_ok!(Call::Escrow(EscrowCall::create_lock {
+                amount: amount_1 / 2,
+                unlock_height: current_height + span
+            })
+            .dispatch(origin_of(vault_id.account_id.clone())));
+
+            assert_noop!(
+                Call::VaultRegistry(VaultRegistryCall::deposit_collateral {
+                    currency_pair: vault_id.currencies.clone(),
+                    amount: amount_1
+                })
+                .dispatch(origin_of(vault_id.account_id.clone())),
+                TokensError::LiquidityRestrictions
+            );
+        });
+    }
+
     #[test]
     fn integration_test_vault_registry_lock_additional_respects_fund_limit() {
         test_with(|vault_id| {