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F e d e r a l R e s er ve Ba n k




Circular No. 70-287
December 1, 1970

To the Chief Executive Officer, Each Member Bank
in the Eleventh Federal Reserve District;

The following statement was made public today by the Board of Governors
of the Federal Reserve System:
The Board of Governors of the Federal Reserve System announced
today its approval of several changes in procedures under which member
banks borrow funds from the System.
These changes, to be put into effect early next year, are of a
technical and procedural nature and are designed to simplify and update
present practices. They reflect no change in the Federal Reserve's
general credit and monetary policies and are not related to the funda­
mental reappraisal of the Discount mechanism which the System still
has under consideration. The changes will:
1. Eliminate regulatory language that implies that a formal
written application must be submitted and a promissory note must be
executed in connection with each borrowing by a member bank from a
Federal Reserve Bank.
2. Permit the use of "continuing lending agreements" as a
substitute for the formal application and promissory note. A member
bank would be obliged unconditionally to repay all advances made
pursuant to the agreement without the necessity of filing the written
application and promissory note in each case.
3- Permit the Reserve Banks to collect interest on borrowings
by member banks at the time of repayment— the accrual method--instead
of deducting interest at the time the borrowing is made.
Make any change in the discount rate applicable to all out­
standing borrowings.
In order to facilitate adoption of the new procedures, the Board has
amended Regulation A "Advances and Discounts by Federal Reserve Banks" so that
references to applications and promissory notes are eliminated. A copy of the
amendments will be forwarded to you in the near future. In addition our Bulletin
covering the procedures under which a member bank may receive credit from this
Reserve Bank is being revised; a copy will be supplied you shortly.

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (

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The probable effective date for these changes is February U, 1971?
and a copy of the above mentioned continuing lending agreement will be provided
well in advance of that date for execution by an officer authorized to borrow.
If you have any questions concerning the above, please contact an
officer at our head office or appropriate branch who is shown by our Directory
to have responsibility for the loan function.
Yours very truly,
P. E. Coldwell