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F ederal r e s e r v e Ba n k o f Dallas DALLAS. TEXAS 75222 C irc u la r No. 78-136 October 2, 1978 AMENDMENTS TO REGULATIONS D AND M Elimination of Reserve Requirements On Eurodollar Borrow ings TO ALL MEMBER BANKS AND OTHERS CONCERNED IN THE ELEVENTH FEDERAL RESERVE D ISTR IC T: On August 30, 1978, this Reserve Bank issued C irc u la r No. 78-123 concerning the elimination of re s e rv e requirem ents on Euro dollar b o rro w in g s, and advised those to whom the c ir c u la r was transmitted that amendments to Regulations D and M would be forthcom ing. Enclosed a re an amendment to Regulation D, Section 2 0 4 .5 , and an amendment to Regulation M, Section 213 .7, which member banks and others that main tain Regulations Binders should file in th eir b in d e rs . In o rd e r for Regulation M to be c u r r e n t effective October 5, 1978, you a re requested to destroy the amendments which w ere effective May 22, 1975 (Sections 2 1 3 .7 (a ) and ( b ) ) ; F e b ru a ry 6, 1975 (Section 213.7 ( b ) ); and December 1, 1977 (Section 213 .7 ( b ) ) . If you have any questions reg a rd in g Regulation D, please con ta c t A llan Y . Neale at the Head Office (E xt. 6334), or the Manager of the Accounting Department at our El Paso Branch (9 1 5 /5 4 4 -4 7 3 0 ), Houston Branch (7 13/659-443 3), or our San Antonio Branch (5 1 2 /2 2 4 -2 1 4 1 ). Any questions reg ard in g Regulation M should be directed to S h e r ry L. Conley or Sydna H . Gordon of this Bank's Holding Company Supervision D epart ment (E x t. 6182) . Additional copies of the enclosed amendments w ill be furnished upon request to the S e creta ry 's Office of this Bank, E xt. 6267. S incerely you rs, Robert H . Boykin F irs t V ice President Enclosures Banks and others are encouraged to use the fo llow ing incoming W ATS numbers in contacting this Bank: 1-800-492-4403 (intrastate) and 1-800-527-4970 (interstate). For calls placed locally, please use 651 plus the extension referred to above. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM RESERVES OF MEMBER BANKS SUPPLEMENT TO REGULATION D As amended effective October 5, 1978 SECTION 204.5— RESERVE REQUIREMENTS (a) Reserve percentages. Pursuant to the pro visions of section 19 of the Federal Reserve Act and § 204.2(a) and subject to paragraph (c) of this section, the Board of Governors of the Federal Reserve System hereby prescribes the following reserve balances that each member bank of the Federal Reserve System is required to maintain on deposits with the Federal Reserve Bank of its district. (1) If not in a reserve city — demand deposits are in excess of $10 million but not more than $100 million, or ( d ) $11,475,000 plus 12% percent of its net demnad deposits in excess of $100 million. (2) If in a reserve city (except as to any bank located in such a city that is permitted by the Board of Governors of the Federal Reserve Sys tem, pursuant to § 2 0 4 .2 (a )(2 ), to maintain the reserve specified in subparagraph (1) of this paragraph) — (i) 3 percent of (a) its savings deposits and (b ) its time deposits, open account, that constitute de posits of individuals, such as Christmas club ac counts and vacation club accounts, that are made under written contracts providing that no with drawal shall be made until a certain number of periodic deposits have been made during a period of not less than 3 months; and (i) 3 percent of ( a) its savings deposits and ( b) its time deposits, open account, that constitute deposits of 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 of periodic deposits have been made during a period of not less than 3 months; and (ii) 1 percent of its time deposits outstanding on or issued after October 16, 1975, that have an initial maturity of 4 years or more; 2Vi percent of its time deposits outstanding on or issued after December 25, 1975, that have an initial maturity of 180 days or more but less than 4 years; 3 per cent of its time deposits up to $5 million, outstand ing on or issued after October 16, 1975, that have an initial maturity of less than 180 days, plus 6 percent of such deposits in excess of $5 million. Provided, however, that in no event shall the reserves required on its aggregate amount of time and savings deposits be less than 3 percent. (ii) 1 percent of its time deposits outstanding on or issued after October 16, 1975, that have an initial maturity of 4 years or more; 2Vi percent of its time deposits outstanding on or issued after December 25, 1975, that have an initial maturity of 180 days or more but less than 4 years; 3 per cent of its time deposits up to $5 million, outstand ing on or issued after October 16, 1975, that have an initial maturity of less than 180 days, plus 6 percent of such deposits in excess of $5 million. Provided, however, that in no event shall the reserves required on its aggregate amount of time and savings deposits be less than 3 percent. (iii) ( a ) 7 percent of its net demand deposits if its aggregate net demand deposits are $2 million or less, ( b ) $140,000 plus 9Vi percent of its net demand deposits in excess of $2 mllion if its aggregate net demand deposits are in excess of $2 million but not more than $10 million, (c) $900,000 plus 113A percent of its net demand de posits in excess of $10 million if its aggregate net (iii) $49,725,000 plus 16Vn percent of its net cbmand deposits in excess of $400 million. (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 promisory notes, acknowledgements of ad vance, due bills, or similar obligations described in § 204.1(f) to foreign offices of other banks,7 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 § 2 0 4 .3 (a)(1 ) and (2 ); but during each week of the four-week period beginning May 22, 1975, and during each successive four-week (“maintenance”) period, a member bank shall maintain with the Reserve Bank of its district a daily average bal ance equal to zero percent of the daily average amount of such deposits during the four-week computation period ending on the Wednesday 15 days before the beginning of the maintenance period. An excess or deficiency in reserves in any week of a maintenance period under this para graph shall be subject to § 204.3(a)(3), as if com puted under § 204.3(a)(2), and deficiencies under this paragraph shall be subject to § 204.3(b).8 7 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. 8 The term “computation period” in § 204.3(a) (3) and (b) shall, for this purpose, be deemed to refer to each week of a maintenance period under this paragraph. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM FOREIGN ACTIVITIES OF NATIONAL BANKS AMENDMENT TO REGULATION M (b) Credit extended to United States residents. During each week of the four-week period be ginning May 22, 1975, and during each week of each successive four-week maintenance period, a SECTION 213.7 — RESERVES AGAINST member bank having one or more foreign FOREIGN BRANCH DEPOSITS branches shall maintain with the Reserve Bank of its district, as a reserve against its foreign branch (a) Transactions with parent bank. During each deposits, a daily average balance equal to zero per week of the four-week period beginning May 22, cent of the daily average credit outstanding from 1975, and during each week of each successive such branches to United States residents7 (other four-week (“maintenance”) period, a member than assets acquired and net balances due from bank having one or more foreign branches shall its domestic offices) during the four-week compu maintain with the Reserve Bank of its district, as tation period ending on the Wednesday 15 days a reserve against its foreign branch deposits, a before the beginning of the maintenance period: daily average balance equal to zero percent of the Provided, That this paragraph does not apply to daily average total of ■— credit extended (1) in the aggregate amount of $100,000 or less to any United States resident, (2) (1) net balances due from its domestic offices by a foreign branch which at no time during the to such branches, and computation period had credit outstanding to (2) assets (including participations) held by such United States residents exceeding $1 million, (3) branches which were acquired from its domestic to enable the borrower to comply with the require offices (other than assets representing credit ex ments of the Office of Foreign Direct Investments, tended to persons not residents of the United Department of Commerce,8 (4) under binding States), during the four-week computation period commitments entered into before May 17, 1973, ending on the Wednesday 15 days before the or (5) to an institution that will be maintaining beginning of the maintenance period. reserves on such credit under § 204.5(c) of Regu lation D or § 211.7(c) of Regulation K or to a foreign-owned-banking institution that will vol untarily be maintaining member bank reserves on such credit. Effective October 5, 1978, § 213.7 is amended to read as follows: t F o r this Regulation to be complete as amended effective October 5, 1978, retain: 1) Printed Regulation pam phlet containing Regulation M dated January 7, 1971; 2) Amendment effective August 25, 1975, Section 213.3(b) (6), (b) (7), and (b) (8); and 3) This slip sheet. 7 (a) Any individual residing (at the time the credit is extended) in any State of the United States or the District of Columbia; (b) any corporation, partnership, association, or other entity organized therein (“domes tic corporation”); and (c) any branch or office located therein of any other entity wherever organized. Credit extended to a foreign branch, office, subsidiary, affiliate or other foreign establishment (“foreign affiliate”) controlled by one or more such domestic corporations will not be deemed to be credit extended to a United States resident if the proceeds will be used in its foreign business o r that of other foreign affiliates of the controlling domestic corporation(s). s The branch may in good faith rely on the borrower’s certification that the funds will be so used.
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