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F E D E R A L R E S E R V E BANK
O F NEW YORK
Circular No. 3 4 4 1 " !
April 28, 1949
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SUPPLEMENT TO REGULATION D

Reserves Required To Be Maintained By Member Banks
W ith Federal Reserve Banks
Reductions in Reserve Requirements
To all Member Banlcs in the
Second Federal Reserve District:

The Board of Governors of the Federal Reserve System has today amended the Supple­
ment to Regulation D, a printed copy o f which is enclosed, reducing reserve requirements
of member banks effective as to member banks not in reserve and central reserve cities at the
opening o f business on May 1, 1949, and as to member banks in reserve and central reserve
cities at the opening o f business on May 5,1949.
The B oa rd ’s statement fo r the press, released for publication A pril 29, 1949, regarding
this action is as follow s:
The Board of Governors has reduced 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

Central reserve city banks
Reserve city banks
Non-reserve city banks

Effective

From 26 to 24 per cent
From 22 to 21 per cent
From 16 to 15 per cent

May 5, 1949
May 5,1949
May 1,1949

From 7 ^ to 7 per cent
From 7 ^ to 7 per cent

May 5,1949
May 1,1949

On time deposits

Central reserve and
reserve city banks
Non-reserve city banks

The effect of these decreases will be to lower the required reserves of banks in central reserve cities
by approximately 500 million dollars, of banks in reserve cities by approximately 350 million dollars,
and of banks in non-reserve cities by 350 million dollars.
On September 8, 1948, the Board increased reserve requirements of member banks to the higher
figures given above, under the temporary additional authority granted by Congress in the preceding
August. This supplemental authority permitted a maximum of 4 per cent to be added to statutory
reserve requirements on demand deposits and of 1
per cent on time deposits.
“ The present action” Chairman McCabe stated “ was taken in furtherance of the Board’s policy
of adjusting all of its credit regulations in accordance with changing economic conditions and the
credit requirements of the current business situation. Since the first of the year there has been a decline
of approximately one and one-half billion dollars in loans at member banks. About one billion of this
decline has occurred at member banks in New York and Chicago— the central reserve cities. The
remainder of the decline was largely at banks in reserve cities. In view of this trend of loans and
the fact that requirements at the New York and Chicago banks had been increased from 20 to 26
per cent during 1948 the Board felt that it was appropriate at this time to reduce the requirements
for the central reserve city banks somewhat more than for other member banks. W e have frequently
stated that credit regulations are not a one-way street. They should be tightened or relaxed as general
economic conditions require.”

Additional copies of this circular and of the enclosed supplement will be furnished upon
request.




A

llan

S proul,

President.

SUPPLEMENT TO REGULATION D
ISSUED B Y T H E BOARD OF GOVERNORS OP T H E FED E RA L RESERVE S Y S T E M

Effective as to member banks not in reserve and central reserve cities at
opening of business on May 1, 1949, and as to member banks in reserve
and central reserve cities at opening of business on May 5, 1949.

RESERVES REQUIRED TO BE
M AIN TAINED B Y MEMBER BANKS
W IT H 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:
7 per cent of its time deposits plus—
15 per cent of its net demand deposits if not in a reserve or cen­
tral reserve city;
21 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
15 per cent reserves against its net demand deposits;
24 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 15 per cent or 21 per cent reserves
against its net demand deposits.




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