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federal Reserve b a n k o f Dallas DALLAS, TEXAS 75222 C i r c u l a r No. 75-52 A pril 11, 1975 DECREASE IN RESERVE REQUIREMENT ON FOREIGN BORROWINGS OF MEMBER BANKS TO ALL MEMBER BANKS IN THE ELEVENTH FEDERAL RESERVE DISTRICT: T h e r e is quoted below the te x t of a p r e s s r e le a s e is su e d W ed nesday, April 10, 1975, b y the Board of G o v e r n o r s of the Federal Re s e r v e System a n n o u n c in g am endm ents to R egulations D a n d M r e d u c in g the r e s e r v e re q u ir e m e n ts on fo reig n b o r r o w i n g s of m em ber b a n k s . T h e Board of G o v e rn o rs of th e F e d e ra l R e s e r v e System a n n o u n c e d today a re d u c tio n from 8 p e r c e n t to 4 p e r c e n t in the r e s e r v e r e q u i r e m e n t on fo reign b o rr o w i n g s of member b a n k s , p r im a r ily E u r o - d o l l a r s . T h is action will b r i n g the E u r o - d o lla r r e s e r v e r e q u i r e ment into b e tte r a lig nm e nt w ith r e s e r v e re q u ir e m e n ts on the time a n d s a v i n g s d e p o sits of dom estic r e s i d e n t s a n d may s t r e n g t h e n the position of th e U . S . d o lla r in the fo reig n e x c h a n g e m a r k e ts . T h e re d u c tio n will affect r e s e r v e s tha t must be main tained a g a i n s t E u r o - d o lla r b o rr o w i n g s in the fo u r w eek p e rio d b e g in n in g May 22. T h e actual r e s e r v e will be b a s e d on the level of b o r r o w i n g s d u r i n g th e p e rio d from A pril 10 t h r o u g h May 7. T h e action will r e d u c e r e q u i r e d r e s e r v e s by a b o u t $65 million. Also affected by the action a r e f o r e ig n - o w n e d b a n k in g in stitu tio n s tha t h a v e v o lu n ta rily m aintained a r e s e r v e re q u ir e m e n t on E u r o - d o lla r b o r r o w i n g s s in c e mid-1973. T h e Board o rig in a lly r e q u e s t e d the v o lu n ta ry action d u r i n g a p e rio d of m o netary r e s t r a i n t . A lthough c u r r e n t This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) - 2 - m onetary policy is not d i r e c t e d to w a rd c r e d i t r e s t r a i n t , the Board b e lie v e s it is im po rtant th a t b a n k in g in s titu tions o p e ra tin g in the United States r e c e iv e pa ra lle l tre a tm e n t with r e s p e c t to m ain taining r e s e r v e s on in c r e a s e s in th e i r E u r o - d o lla r b o r r o w i n g s . T h e r e f o r e , the Board r e q u e s t e d the f o r e ig n - o w n e d institutions to maintain a v o lu n ta r y r e s e r v e of 4 p e r c e n t a g a i n s t in c r e a s e s in n et foreign b o r r o w i n g s that ex ceed the a v e r a g e of s u c h b o r r o w i n g s d u r i n g May 1973. A re d u c tio n in the v o lu n ta ry r e s e r v e from 8 p e r cent to 4 p e r c e n t will re le a s e a b o u t $15 million in r e s e r v e s . A r e s e r v e r e q u ir e m e n t on E u r o -d o lla r b o r r o w i n g s by m em ber b a n k s w as o rig in a lly e s t a b lished in 1969. T h e r e s e r v e ratio h a s been 8 p e r c en t s in c e May 1973. A p p r o p r i a te am endm ents to R egulations D a n d M, s u ita b le for in s e rtio n in y o u r b i n d e r of Bulletins and R eg u latio n s, will be f o r w a rd e d to you in the n e a r f u tu r e . S in c e re ly y o u r s , T . W. Plant F ir s t Vice P r e s i d e n t
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