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FED ER AL R E SE R V E BAN K
O F N E W YORK
rCircular No. 3 3 7 2 * !
L September 8, 1948 J

SUPPLEMENT TO REGULATION D
Reserves Required To Be M aintained By Member Banks
W ith Federal Reserve Banks
Increases in Reserve Requirements
To all Member B anks in the
Second F ederal Reserve D istrict:

The Board of Governors of the Fed eral Reserve System has today amended the Supple­
ment to Regulation D, a printed copy of which is enclosed, increasing reserve requirements
of member banks effective as to member banks not in reserve and central reserve cities at the
opening of business on Septem ber 16, 1948, and as to member banks in reserve and central
reserve cities at the opening of business on Septem ber 24, 1948.
The B o a rd ’s statem ent fo r the press, released for publication today, regarding this action
is as follow s:
As a further step toward restraining inflationary expansion of bank credit, the Board of Governors
today increased the amount of reserves required to be maintained with Federal Reserve Banks by banks
which are members of the Federal Reserve System as follows:
On net demand deposits

E ffective

Nonreserve city banks
Reserve city banks
Central reserve city banks

From 14 to 16 per cent
From 20 to 22 per cent
From 24 to 26 per cent

September 16,1948
September 24,1948
September 24,1948

From 6 to 7*/2 per cent

September 16,1948

From 6 to 7^2 per cent

September 24,1948

On time deposits

Nonreserve city banks
Central reserve and re­
serve city banks

The effect of these increases will be to raise the required reserves of banks in central reserve cities
by approximately $500 million, of banks in reserve cities by approximately $700 million, and of banks
in nonreserve cities by approximately $700 million.
At the recent special' session of Congress the Board of Governors was given temporary addi­
tional authority to increase reserve requirements of member banks and under the provisions of section
19 of the Federal Reserve Act as thus recently amended the Board now has authority to establish
reserve requirements for the various classes of member banks within the following lim its:
Against net demand deposits

Minimum

Central reserve city banks............................................................................................
Reserve city banks .......................................................................................................
Nonreserve city b a n k s ................................................................................................

Maximum

13
10
7

30
24
18

Against time deposits

All classes of b a n k s ....................................................................................................

3

7^

When the increases become effective on the dates stated above, reserve requirements on time depos­
its will be at the maximum limit under existing authority and requirements on net demand deposits
will be 2 percentage points less than the maximum at reserve and nonreserve city banks and 4 percent­
age points less than the maximum at central reserve city banks.
AMENDMENT TO REGULATION D

In connection with the B o a rd ’s action amending the Supplement to Regulation D, the
B oard has also today issued an amendment to Regulation D, effective Septem ber 16, 1948,
a printed copy of which is also enclosed. The only purpose of the amendment is to bring
the text of the regulation into conform ity with the text of the law.
Additional copies of this circular and of the enclosures will be furnished upon request.




A lla n S pro u l,

P residen t.

RESER V ES OF M EM BER BANKS

AMENDMENT TO REGULATION D
ISSUED BY THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

Regulation D is amended in the following respects, effective Sep­
tember 16, 1948:
1. Subsection (a ) of section 2 is amended by striking out the
words ‘ ‘ the sixth paragraph of ” in the last sentence thereof.
2. Footnote numbered 6 appended to subsection (a) of section 2
is amended to read as follows:
“The amount of the reserves required to be maintained by any such
member bank as a result of any such change may not be less than the
amount of the reserves specified above nor more than twice such amount,
except that through June 30, 1949, the required reserves for time deposits
may be not more than 7% per cent and those for demand deposits of
banks in central reserve cities, reserve cities, and other places may be not
more than 30 per cent, 24 per cent, and 18 per cent, respectively.,,

3. Subsection (Z of section 2 is amended by striking out the
>)
following in the first sentence thereof:
“ and, until six months after the cessation of hostilities in the
present war as determined by proclamation of the President or
concurrent resolution of the Congress, no deposit payable to the
United States by any member bank arising solely as the result of
subscriptions made by or through such member bank for United
States Government securities issued under authority of the Second
Liberty Bond Act, as amended, shall be included in net demand
deposits or in time deposits which are subject to reserve
requirements ’ ’




SUPPLEMENT TO REGULATION D
IS S U E D B Y T H E BOARD OP GOVERNORS OF T H E FE D E R A L R E S E R V E S Y S T E M

Effective as to member banks not in reserve and central reserve cities at the
opening of business on September 16, 1948, and as to member banks in reserve
and central reserve cities at the opening of business on September 24, 1948

RESERVES REQUIRED TO RE
MAINTAINED BY MEMBER BANKS
WITH FEDERAL RESERVE BANKS
Pursuant to the provisions of section 19 of the Federal Reserve Act
and section 2(a) of its Regulation D, the Board of Governors of the
Federal Reserve System hereby prescribes the following reserve bal­
ances which each member bank of the Federal Reserve System is
required to maintain on deposit with the Federal Reserve Bank of its
district:
IY 2 per cent of its time deposits plus—
16 per cent of its net demand deposits if not in a reserve or cen­
tral reserve city;
22 per cent of its net demand deposits if in a reserve city, except
as to any bank located in an outlying district of a reserve city or in
territory added to such city by the extension of the city’s corporate
limits, which, by the affirmative vote of five members of the Board of
Governors of the Federal Reserve System, is permitted to maintain
16 per cent reserves against its net demand deposits;

26 per cent of its net demand deposits if located in a central
reserve city, except as to any bank located in an outlying district of
a central reserve city or in territory added to such city by the exten­
sion of the city’s corporate limits, which, by the affirmative vote of
five members of the Board of Governors of the Federal Reserve
System, is permitted to maintain 16 per cent or 22 per cent reserves
against its net demand deposits.





Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102