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FEDERAL RESERVE BOARD WASHINGTON ADDRESS OFFICIAL CORRESPONDENCE TO THE FEDERAL RESERVE BOARD X-5035 January ll, 1928. SUBJECT: Reserves Aga.inst Dividends Declared but Unpaid. DeCJr Sir: The question has been presented to the Board whether a. member bank is required to maintain reserves a.gainst a dividend for the period intervening between the date of the c,eclera.tion of the dividend and the date on which it is paid. The Federal Reserve :Boa.rd is of the opinion that this question should be answered in the nega.tive. Reserves are required to be maintained only ag::!.inst deposits. While the declaration of a dividend creates a liability it does not create a. de:::;:osi t liability. Reserves a.re not re.quired in such cases until cashiers' checks are issued by the bank to its stockholQers for their proportionate shares of the dividend or their deposit accounts are credited with the proper amounts. By Order of the Federal Reserve Board. Walter L. Eddy, Secretary. TO GOVERNORS AND AGENTS OF ALL F. R. B.A.."m:S.
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