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Circular No. 12
Series of 1930

F E D E R A L R E SE R V E B AN K
OF DALLAS

Dallas, Texas, October 15, 1930

NEW METHOD OF COMPUTING RESERVE REQUIREMENTS
(Based on Deposits at opening of business the current day)

To the Member Bank Addressed:
There is reproduced herein a letter from the Federal Reserve Board outlining’ an
amendment to Regulation D which provides for the computation of reserve requirements
of member banks on a basis of their net deposit liability at the opening of business each
day instead of the close of business, as heretofore.
This amendment makes no change in the existing practice of computing reserve re­
quirements on the basis of average daily net deposit balances covering semi-weekly,
weekly or semi-monthly periods. Your attention, however, is called to the fact that the
amendment does provide that the required daily reserve balance of each member bank
shall be based upon its net deposit balance at the opening of business each day.
This amendment becomes effective with the beginning of the first reserve computa­
tion period of each member bank after midnight on October 31, 1930. The effective dates
for the various classes of member banks in the Eleventh Federal Reserve District will
therefore be as follows:
Federal Reserve Bank and Branch city banks (Dallas, El Paso, Houston and San
Antonio)— Period commencing Saturday, November 1.
Other reserve city banks (Fort Worth, Galveston, Waco)— Period commencing
Thursday, November 6.
All other banks— Period commencing Saturday, November 1.
It will accordingly be appreciated if member banks will be guided by the foregoing
in the preparation of their reports of net deposits after October 31, 1930.
Yours very truly,

Governor.

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

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F E D E R A L RESERV E BOARD
WASHINGTON
October 2, 1930
SUBJECT: Amendment to Regulation D permitting computation of deficiencies in
reserves on the basis of member banks deposits at opening of business in­
stead of close of business.
Dear Sir:
The Federal Reserve Board has amended subsection (a) of Section IV of its Regula­
tion D so as to provide that, in computing penalties for deficiencies in reserves, the re­
quired reserve balance of each member bank at the close of business each day shall be
based upon its net deposit balances at the opening of business, instead of the close of
business, on the same day. No change, however, was made in the existing practice of
computing such deficiencies on the basis of average daily net deposit balances covering
semi-weekly, weekly or semi-monthly periods.
The amendment becomes effective as to each member bank at the beginning of the
first reserve computation period of such member bank commencing after midnight on
October 31, 1930.
Section IV (a) of the Regulation, as amended, reads as follows:
“ SECTON IV.

PENALTIES FOR DEFICIENCES IN RESERVES

“ Inasmuch as it is essential that the law with respect to the maintenance bv mem­
ber banks of the required minimum reserve balances be strictly complied with, the Fed­
eral Reserve Board, under authority vested in it by section 19 of the Federal reserve act,
hereby prescribes the following rules governing penalties for deficiencies in reserves:
“ (a) Basic penalty.
“ (1) Deficiencies in reserve balances of member banks in cities where Federal re­
serve banks or branches thereof are located and in such other reserve cities as the Fed­
eral Reserve Board may designate from time to time will be computed on the basis of
average daily net deposit balances covering semi-weekly periods. Deficiencies in reserve
balances of member banks in all other reserve cities will be computed on the basis of aver­
age daily net deposit balances covering weekly periods. Deficiencies in reserve balances
of other member banks will be computed on the basis of average daily net deposit bal­
ances covering semi-monthly periods.
“ (2) In computing such deficiencies the required reserve balance of each member
bank at the close of business each day shall be based upon its net deposit balances at the
opening of business on the same day; and the semi-weeldy, weekly and semi-monthly
periods referred to in paragraph (1) hereof shall end at the close of business on days to be
fixed by the Federal reserve banks with the approval of the Federal Reserve Board.
“ (3) Penalties for such deficiencies will be assessed monthly on the basis of average
daily deficiencies during each of the reserve computation periods ending in the preceding
calendar month.
“ (4) Such penalties shall be assessed at a basic rate of 2 per cent per annum above
the Federal reserve bank discount rate on 90-day commercial paper, in effect on the first
day of the calendar month in which the deficiencies occurred/’
By order of the Federal Reserve Board.
Very truly yours,
e. m.

McCl e l l a n d ,

Assistant Secretary.

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