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F ederal Reserve Bank DALLAS, TEXAS of Dallas 75222 C i r c u l a r N o. 73-18*4J u l y 2 5 , 1973 CHANGES IN REGULATIONS D AND Q (Marginal Reserve Requirements) (Maximum Rates of Interest) To All Member Banks in the Eleventh Federal Reserve District: The Board of Governors of the Federal Reserve System has amended its Regulation D, "Reserves of Member Banks", and Regulation Q, "Interest on Deposits". The Board amended Regulation D in order to apply the 8 per cent marginal reserve requirement to multiple maturity time deposits of $100,000 or more. The amount of such deposits outstanding during the week ending May l6 , 1973? will be included in the member bank's base for purposes of calculating the marginal reserve requirement effective with the reserve computation period beginning August 30, 1973. Effective July l6 , 1973? the Board amended Section 20*1.5 (a)(l)(ii)(b) and (2)(ii)(b) of Regulation D to read as set forth in Section 20^.5(a)(l)(ii)(b) and (c) and (2)(ii)(b) and (c) in the attached Supplement. This change clarifies the types of time deposits to which reserve requirements are applicable. Effective August 30, 19735 the Board amended Section 20U.5(a)(l)(ii)(a) and (2)(ii)(a) of Regulation D to read as set forth in the attached Supplement. Effective July l6 , 1973 5 the amendment to Regulation Q, removes the distinction between single maturity and multiple maturity time deposits with respect to the maximum rates of interest payable by member banks on such deposits. The revised Supplement is attached. Yours very truly, P. E . Coldwell President Attachments 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 SUPPLEMENT TO REGULATION Q Effective July 16,1973 SECTION 217.7 — M A X IM U M R ATES OF INTEREST PA Y A B L E B Y M EM BER BANKS O N TIM E A N D SAVINGS DEPOSITS Pursuant to the provisions of section 19 of the Federal Reserve Act and § 217.3, the Board of Governors of the Federal Reserve System hereby prescribes the following maximum rates1 of inter est per annum payable by member banks of the Federal Reserve System on time and savings deposits: (a) Time deposits with no maximum rate pre scribed. There is no maximum rate of interest presently prescribed (1) on any time deposit of $100,000 or more, or (2) on any time deposit of $1,000 or more with a maturity of 4 years or more. (b) Time deposits with maximum rates pre scribed. Except as provided in paragraph (a), no member bank shall pay interest on any time de posit at a rate in excess of the applicable rate under the following schedule: Maturity Maximum per cent 30 days or more but less than 90 days 90 days or more but less than 1 year 5V2 1 year or more but less than 30 months 6 30 months or more 6 V2 (c) Savings deposits. N o member bank shall pay interest at a rate in excess of 5 per cent on any savings deposit. 1 The limitations on rates of interest payable by member banks of the Federal Reserve System on time and savings deposits, as prescribed herein, are not applicable to any deposit which is payable only at an office of a member bank located outside the States of the United States and the District of Columbia. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM SUPPLEMENT TO REGULATION D A s am ended effective A ugust 30 , 1973 SECTION 204.5 — R ESER V E R EQ U IR EM EN TS (a) R eserve percentages. Pursuant to the provi sions 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 which each member bank o f the Federal Reserve System is required to maintain on deposit with the Federal Reserve Bank of its district: (1 ) If n ot in a reserve city— (i) 3 per cent of (A ) its savings deposits and (B) its time deposits, open account, that constitute deposits 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 (ii) 3 per cent of its other time deposits up to $5 million, plus 5 per cent of such deposits in excess of $5 million: Provided, however, That a member bank shall maintain a reserve balance equal to 8 per cent of the amount by which the daily average amount of time deposits of the types hereinafter specified exceeds either the daily aver age amount of such time deposits outstanding during the computation period ending May 16, 1973, or $10 million, whichever is greater, and such 8 per cent reserve percentage shall apply with respect to time deposits of the following types: (a) time deposits of $100,000 or more; and (b) time deposits represented by promissory notes, acknowledgments of advance, due bills, or similar obligations issued by a member bank’s affiliate, as provided in § 2 0 4 .1 (f); and (c) time deposits represented by bank ac ceptances, as provided in § 2 0 4 .1 (f); and (iii) (a) 8 per cent of its net demand deposits if its aggregate net demand deposits are $2 million or less, (b) $160,000 plus IOV2 per cent of its net demand deposits in excess of $2 million if its aggregate net demand deposits are in excess of $2 million but less than $10 million, (c) $1,000,000 plus H V 2 per cent of its net demand deposits in excess of $10 million if its aggregate net demand deposits are in excess of $10 million but less than $100 million, or (d) $12,250,000 plus 13Vz per cent of its net demand 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 § 204.2(a) ( 2 ) , to maintain the reserves specified in subparagraph (1 ) of this paragraph) — (i) 3 per cent 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) 3 per cent of its other time deposits up to $5 million, plus 5 per cent of such deposits in excess of $5 million: Provided, however, That a member bank shall maintain a reserve balance equal to 8 per cent of the amount by which the daily average amount of time deposits of the types hereinafter specified exceeds either the daily aver age amount of such time deposits outstanding during the computation period ending May 16, 1973, or $10 million, whichever is greater, and such 8 per cent reserve percentage shall apply with respect to time deposits of the following types: (a) time deposits of $100,000 or more; and (b) time deposits represented by promissory notes, acknowledgments of advance, due bills, or similar obligations issued by a member bank’s affiliate, as provided in § 2 0 4 .1 (f); and (c) time deposits represented by bank ac ceptances, as provided in § 2 0 4 .1 (f); and (iii) $52,750,000 plus 18 per cent of its net demand 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 ) R eserve percentages against certain deposits by foreign banking offices. Deposits represented by promissory notes, acknowledgments of ad vance, due bills, or similar obligations described in § 2 0 4 .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 § 2 17.3 (g) thereof, shall not be sub ject to paragraph ( a ) o f this section or to § 2 0 4 .3 (a )(1 ) and ( 2 ); but during each week of the four-week period beginning June 21, 1973, and during each successive four-week ( “main tenance”) period, a member bank shall maintain with the Reserve Bank of its district a daily aver age balance equal to 8 per cent of the daily aver age amount of such deposits during the four-week computation period ending on the Wednesday fifteen days before the beginning of the main tenance period. An excess or deficiency in reserves in any week of a maintenance period under this paragraph shall be subject to § 2 0 4 .3 (a ) (3 ) , as if computed under § 2 0 4 .3 (a ) (2 ) , and deficiencies under this paragraph shall be subjected to § 2 0 4 .3 (b ):9 Provided, That any bank that, under the terms of § 2 04.5(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 ceil ings established hereunder by reducing the amount of its reserve-free base for the computation period ending on May 9, 1973, in ten increments, each equal to 10 percent of its base in such computa tion period ending on May 9, 1973, applied con secutively in each succeeding computation period beginning with the period ending on August 1, 1973, until such reserve-free base is exhausted. 8A ny banking office located outside the States o f the U nited States and th e D istrict of C olum bia of a bank organized under dom estic o r foreign law. 9The term “ com putation period ” in § 2 0 4 .3 (a )(3 ) and (b ) shall, fo r this purpose, be deem ed to refer to each w eek of a m aintenance period under this p aragraph. 1035 F ederal R egister 18658.
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