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FED ER AL RESERVE BANK OF N EW YORK r Circular No. 7 1 8 1 " ] L July 9, 1973 J AMENDMENT TO REGULATION D Reserves of Member Banks To All Member Banlcs, and Others Concerned, in the Second Federal Reserve District: Our Circular ISTo. 7173, dated June 29, 1973, contained the text of a statement, issued by the Board of Governors of the Federal Reserve System, announcing an increase in reserve requirements of one-half of one percentage point on all but the first $2 million of net demand deposits at member banks, and indicated that copies of the Supplement to Regulation D, giving effect to this change, would be sent to you shortly. Enclosed is a copy of the Supplement, which is effective July 19, 1973. Additional copies of the enclosure will be furnished upon request. A lfred H ayes , President. BOARD OF GOVERNORS OF THE FEDER A L RESERVE SYSTEM S U P P L E M E N T T O R E G U L A T IO N D Effective July 1 9 ,1 9 7 3 SE C TIO N 204.5— R E SE R V E R E Q U IR E M E N T S (a) Reserve percentages. Pursuant to the provi sions o f section 19 o f the Federal Reserve A ct and § 204.2(a) and subject to paragraph (c) o f this section, the Board o f G overn ors o f the Federal Reserve System hereby prescribes the follow in g reserve balances that each m em ber bank o f the Federal Reserve System is required to maintain on deposit with the Federal Reserve Bank o f its district: (1) If not in a reserve city— (i) 3 per cent o f (A ) its savings deposits and (B) its time deposits, open account, that constitute deposits o f individuals, such as Christmas club accounts and vacation club accounts, that are made under written contracts providing that no withdrawal shall be made until a certain number o f periodic deposits have been made during a period o f not less than 3 months; and (ii) 3 per cent o f its other time deposits up to $5 million, plus 5 per cent o f such deposits in excess o f $5 million: Provided, however, That a m em ber bank shall maintain a reserve balance equal to 8 per cent o f the am ount by w hich the daily average am ount o f time deposits o f the types hereinafter specified exceeds either the daily average am ount o f such time deposits outstanding during the com putation period ending M ay 16, 1973, or $10 million, w hichever is greater, and such 8 per cent reserve percentage shall apply with respect to time de posits o f the follow in g types: (a) single maturity time deposits o f $100,000 or m ore; and (b) any other time deposits exem pt from the rate limitations o f Regulation Q, other than a deposit due to (i) a foreign banking office o f a bank, or (ii) an institution the time deposits o f w hich are described in § 217.3(g) thereof; and (iii) (a) 8 per cent o f its net dem and deposits if its aggregate net dem and deposits are $2 million or less, ( b ) $160,000 plus 10Vi per cent o f its net dem and deposits in excess o f $2 m illion if its aggregate net dem and deposits are in excess o f $2 million but less than $10 million, ( c ) $1 m illion plus 12V2 per cent o f its net dem and deposits in excess o f $10 million if its aggregate net demand deposits are in excess o f $10 million but less than $100 million, or (d) $12,250,000 plus 13V2 per cent o f its net demand deposits in excess o f $100 m illion. (2) If in a reserve city (except as to any bank located in such a city that is permitted by the Board o f G overnors o f the Federal Reserve Sys tem, pursuant to § 204.2(a)(2), to maintain the reserves specified in subparagraph (1) o f this paragraph)— (i) 3 per cent o f (A ) its savings deposits and (B) its time deposits, open account, that constitute deposits o f individuals, such as Christmas club accounts and vacation club accounts, that are made under written contracts providing that no withdrawal shall be made until a certain number o f periodic deposits have been made during a period o f not less than 3 months; and (ii) 3 per cent o f its other time deposits up to $5 m illion, plus 5 per cent o f such deposits in excess o f $5 million: Provided, however, That a mem ber bank shall maintain a reserve balance equal to 8 per cent o f the am ount by w hich the daily average amount o f time deposits o f the types hereinafter specified exceeds either the daily average am ount o f such time deposits outstanding during the com putation period ending M ay 16, 1973, or $10 million, whichever is greater, and such 8 per cent reserve percentage shall apply with respect to time de posits o f the follow in g types: (a) single maturity time deposits o f $100,000 or m ore; and (b) any other time deposits exempt from the rate limitations o f Regulation Q, other than a deposit due to (/) a foreign banking office o f a bank, or (ii) an institution the time deposits o f w hich are described in § 217.3(g) thereof; and (iii) $5 2,750,000 plus 18 per cent o f its net dem and deposits in excess o f $400 million. (O V E R ) PRINTED IN N EW YORK (b) Currency and coin. The amount of a mem ber bank’s currency and coin shall be counted as reserves in determining compliance with the re serve requirements of paragraph (a) of this section. (c) Reserve percentages against certain deposits by foreign banking offices. Deposits represented by promissory notes, acknowledgments of ad vance, due bills, or similar obligations described in § 204.1(f) to foreign offices of other banks, 8 or to institutions the time deposits of which are exempt from the rate limitations of Regulation Q pursuant to § 217.3(g) thereof, shall not be subject to paragraph (a) of this section or to § 204.3(a)(1) and (2); but during each week of the four-week period beginning June 21, 1973, and during each successive four-week (“ maintenance”) period, a member bank shall maintain with the Reserve Bank of its district a daily average balance equal to 8 per cent of the daily average amount of such deposits during the four-week computation period ending on the Wednesday fifteen days before the beginning of the maintenance period. An excess or deficiency in reserves in any week of a maintenance period under this paragraph shall be subject to § 204.3(a)(3), as if computed under § 204.3(a)(2), and deficiencies under this paragraph shall be subject to § 204.3(b): 9 Provided, That any bank that, under the terms of § 204.5(c) of Regulation D as in effect prior to June 21, 1973, 10 was deducting for the com putation period ending on May 9, 1973, an earlier period’s corresponding daily average total of such deposits (hereinafter called “ reserve-free base”) in calculating its reserve requirements shall con tinue to be entitled to do so in accordance with the terms of such former section, but such reservefree base shall not exceed progressively lower ceilings established hereunder by reducing the amount of its reserve-free base for the computa tion period ending on May 9, 1973, in ten increments, each equal to 10 per cent of its base in such computation period ending on May 9, 1973, applied consecutively in each succeeding computation period beginning with the period ending on August 1, 1973, until such reserve-free base is exhausted. 9 The term “ computation period” in § 204 .3 (a ) (3 ) and (b ) shall, for this purpose, be deemed to refer to 8 Any banking office located outside the States of the United States and the District of Columbia of a bank organized under domestic or foreign law. each week of a maintenance period under this para graph. 10 35 Federal Register 18658.