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FED ERA L RESERVE B ANK OF DALLAS

DALLAS. TEXAS

75222

Circular No. 70-8U
April 7, 1970

PROPOSED AMENDMENT TO REGULATION D
"RESERVES OF MEMBER BANKS"

To All Member Banks
in the EleventhFederal Reserve District:

There is attached a copy of a proposed amendment to Regulation
D, section 20^.l(b), as submitted for publication in the Federal Register.
To aid in the consideration of this matter by the Board,
interested persons are invited to submit relevant data, views, or argu­
ments.

Any such material should be submitted in writing to the Secretary,

Board of Governors of the Federal Reserve System, Washington,

D. C. 20551?

to be received not later than April 27, 1970.
Requests for additional copies of the circular and any questions
relative thereto should be addressed to the Accounting Department of
this Bank.
Yours very truly,
P. E. Coldwell
President
Attachment

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

FEDERAL RESERVE SYSTEM
[12 CFR Part 204]
RESERVES OF MEMBER BANKS

Transfers from Time Deposits To Cover Checks

The Board of Governors is considering changing the present
definition of "time deposits" in this part (Regulation D) to exclude
from the scope of that term any funds which are regularly utilized
by the depositary bank itself, pursuant to an express or implied
agreement with the depositor,
the depositor.

to cover checks drawn on the bank by

Deposits so utilized would be "demand deposits" for

purposes of the reserve requirements imposed by this part*
The proposal being considered is to amend § 204,1(b) to
read as follows:
(b)
Time deposits.--The term "time deposits"
means "time certificates of deposit", "time deposits,
open account" and "savings deposits", as defined below,
but shall not include any deposit representing funds
which are regularly utilized, by action of the depositary
bank itself pursuant to an express or implied agreement
with the depositor, to cover checks drawn on the bank
by the depositor.**

**For example, funds deposited by the trust department
of a bank in its own commercial department are not
"time deposits" if regularly utilized to cover checks
drawn by the trust department.
Recent evidence indicates that some member banks have
accepted in their commercial departments non-interest-bearing
savings accounts from their own trust departments.

Each day

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2-

a transfer is made to the trust department*s checking account to cover
checks drawn that day by the trust department.

The obvious purpose

of this procedure is to avoid the higher demand deposit reserve require­
ments with respect to funds which in practical effect are subject to
check.

The intent of the amendment is to prevent the use of a savings

or any other time deposit in tandem with a checking account, pursuant
to an express or implied agreement, so as to vitiate the effect of the
demand deposit reserve requirements in this part.
To aid in the consideration of this matter by the Board,
interested persons are invited to submit relevant data, views, or
arguments.

Any such material should be submitted in writing to the

Secretary, Board of Governors of the Federal Reserve System,
Washington, D. C. 20551, to be received not later than April 27, 1970.
Under the B o a r d ’s rules regarding availability of information (12 CFR
Part 261), such materials will be made available for inspection and
copying upon request unless the person submitting the material asks
that it be considered confidential.
By order of the Board of Governors, March 24, 1970.

(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Deputy Secretary.
(SEAL)

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