View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

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.