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ACCESS FEDLINE ACCESS TREASURY ABOUT US CONTACT US SERVICE STATUS Search: Access Solutions - FedLine Account Services Check ® BROWSE BY TOPIC FedACH ® FedCash Fedwire ® National Settlement Treasury Central Bank ® Home - Help - Excess Balance Account Frequently Asked Questions - Background and Eligibility Service Offerings Service and Access Setup Operations Resources Events and Education News and Communications Help POPULAR CONTENT Rules and Regulations Forms Business Continuity Excess Balance Account Frequently Asked Questions Interest on Reserves (Off-site Federal Reserve Financial Services is committed to providing the answers and information you need. Answers to many of our customers most frequently asked questions can be found using the links below. How to Calculate Required Reserve Balances and Excess Balances (PDF) (Off- If your question is not answered by the information provided on the site, My FedDirectorySM provides a comprehensive list of service and support contacts who can assist you. What is an excess balance account? Why is the Federal Reserve Bank offering excess balance accounts? Holiday Schedules When will excess balance accounts be available? MY QUICK LINKS Why are excess balance accounts temporary? Which institutions may act as agent for an excess balance account? Which institutions may be participants in an excess balance account? FedACH Services Education Fedwire Testing Opportunities Check Adjustment Quick Reference Guide New Coin Information Excess Balance Account Resource Center Background and Eligibility Service Fees Industry Links RELATED CONTENT How does an excess balance account differ from the pass-through correspondent/respondent relationship that a participant may already have with a correspondent? Is participation in an excess balance account required by the Federal Reserve? Check Restructuring Q: What is an excess balance account? A: An excess balance account is a limited-purpose account at a Federal Reserve Bank established for maintaining the excess balances of one or more institutions (participants) that are eligible to earn interest on balances held at the Federal Reserve Banks. An excess balance account is managed by an agent on behalf of the participants. Top of Page Q: Why is the Federal Reserve Bank offering excess balance accounts? A: Excess balance accounts are intended to allow eligible institutions to earn interest on their excess balances in an account relationship directly with a Federal Reserve Bank without significantly disrupting established business relationships with their correspondents. Under the current configuration of interest rates, some respondents appear to prefer holding their excess balances in an account at the Federal Reserve Bank, rather than selling them through a correspondent in the federal funds market. When a correspondent holds its respondents’ excess balances in its account at its Federal Reserve Link) site Link) Account Management Guide (PDF) Reserve Maintenance Manual (PDF) Account Services RULES AND REGULATIONS Regulation D (Off-site Link) GO Bank (and passes back the interest to its respondents), the correspondent’s assets increase and its regulatory leverage ratio may fall. Excess balance accounts permit the correspondent to serve as agent when placing the respondents’ excess balances at the Federal Reserve Bank. Balances in the excess balance account are an asset of the participants in the account, not the agent that manages the account; therefore, balances in an excess balance account would not be assets of the agent and would not be included in the calculation of the agent’s regulatory leverage ratio. Top of Page Q: When will excess balance accounts be available? A: Excess balance accounts will be available starting with the reserve maintenance period beginning on July 2, 2009. Although these accounts are authorized temporarily, a sunset date has yet to be established. Top of Page Q: Why are excess balance accounts temporary? A: Current financial market conditions are exerting pressure on correspondentrespondent relationships. Excess balance accounts are intended to mitigate that pressure. As market conditions evolve, the Board will evaluate the continuing need for excess balance accounts. Top of Page Q: Which institutions may act as agent for an excess balance account? A: An institution that wishes to act as agent for an excess balance account must have its own account at a Federal Reserve Bank. The institution must also have the ability to carry out the responsibilities of an agent and comply with the terms and conditions established by the Federal Reserve Bank with respect to the operation of the excess balance account. An agent for an excess balance account need not be eligible to earn interest on its own balance maintained at a Federal Reserve Bank. Top of Page Q: Which institutions may be participants in an excess balance account? A: Each participant in an excess balance account must be eligible to earn interest on its balances at a Federal Reserve Bank. Institutions that are eligible to earn interest are depository institutions (banks, savings banks, mutual savings banks, savings associations, and credit unions), branches and agencies of foreign banks, Edge Act and agreement corporations, and trust companies. Top of Page Q: How does an excess balance account differ from the pass-through correspondent/respondent relationship that a participant may already have with a correspondent? A: The Board’s Regulation D provides that balances in a pass-through correspondent’s account at a Federal Reserve Bank represent a liability of the Federal Reserve Bank to that pass-through correspondent, even though the account may contain funds that are attributable to one or more of the passthrough correspondent’s respondent institutions. Balances in an excess balance account represent a liability of the Federal Reserve Bank to the participants alone, not to the agent. Top of Page Q: Is participation in an excess balance account required by the Federal Reserve? A: No. Participation in an excess balance account is strictly voluntary. However, beginning on July 2, 2009, Federal Home Loan Banks will no longer be paid interest on excess balances held in their master accounts at Federal Reserve Banks. Any depository institution that uses a Federal Home Loan Bank as a pass-through correspondent will no longer earn interest on its excess balances, unless the excess balances are held in an excess balance account. Top of Page This site is a product of the Federal Reserve Banks. Please see Legal Notices and Privacy Policy. Pages on this site marked (PDF) require the use of the Adobe® Acrobat® Reader® 6 or higher. Adobe also provides a more accessible download page. Address comments and questions to the Financial Services Webmaster. ©2010 Federal Reserve Banks ACCESS FEDLINE ACCESS TREASURY ABOUT US CONTACT US SERVICE STATUS Search: Access Solutions - FedLine Account Services Check ® BROWSE BY TOPIC FedACH ® FedCash ® Fedwire National Settlement Treasury Central Bank ® Home - Help - Excess Balance Account Frequently Asked Questions - Roles and Responsibilities Service Offerings Service and Access Setup Operations Resources Events and Education News and Communications Help POPULAR CONTENT Rules and Regulations Forms Business Continuity Service Fees Holiday Schedules Industry Links Excess Balance Account Frequently Asked Questions Interest on Reserves (Off-site Federal Reserve Financial Services is committed to providing the answers and information you need. Answers to many of our customers most frequently asked questions can be found using the links below. How to Calculate Required Reserve Balances and Excess Balances (PDF) (Off- If your question is not answered by the information provided on the site, My FedDirectorySM provides a comprehensive list of service and support contacts who can assist you. What is the Federal Reserve Bank's role with respect to an excess balance account? Link) site Link) Account Management Guide (PDF) Reserve Maintenance Manual (PDF) Account Services What are the responsibilities of an agent for an excess balance account? RULES AND REGULATIONS What are the responsibilities of the participants with respect to an excess balance account? Regulation D (Off-site Link) What are the agent's responsibilities for reporting to the Federal Reserve Bank? FedACH Services Education Can an institution be a participant in multiple excess balance accounts? Fedwire Testing Opportunities Can an institution act as agent for multiple excess balance accounts? Check Adjustment Quick Reference Guide Must participants in an excess balance account be located in the same Federal Reserve District as the agent? Check Restructuring Excess Balance Account Resource Center Roles and Responsibilities MY QUICK LINKS New Coin Information RELATED CONTENT Q: What is the Federal Reserve Bank's role with respect to an excess balance account? A: The Federal Reserve Banks have set forth terms and conditions for establishing and operating excess balance accounts, including terms and conditions relating to fees for services, requirements and restrictions for agents, charges for noncompliance, and account termination. The Federal Reserve Banks will calculate and pay interest on the average, aggregate balance in an excess balance account over a one-week reserve maintenance period. The Federal Reserve Banks may, at their discretion, request records pertaining to an excess balance account from the agent that manages it. Top of Page Q: What are the responsibilities of an agent for an excess balance account? A: The responsibilities of an agent for an excess balance account include: 1) Following participants’ instructions for making deposits to or withdrawals from or otherwise handling balances in the excess balance account; 2) Allocating interest payments to the participants holding excess balances in the excess balance account; 3) Maintaining adequate records to demonstrate the excess GO balances in the excess balance account attributable to each participant; and 4) Complying with any other terms and conditions for the maintenance and operation of the excess balance account as established by the Federal Reserve Banks. Top of Page Q: What are the responsibilities of the participants with respect to an excess balance account? A: The responsibilities of a participant in an excess balance account include: 1) Selecting an agent; and 2) Providing instruction to the agent for the handling of the participant’s balances in the account, including instructions about the distribution of interest earned on the balance attributable to the participant, withdrawals from and deposits to the excess balance account, and the timing of such transactions. Top of Page Q: What are the agent's responsibilities for reporting to the Federal Reserve Bank? A: The responsibilities of an agent include submitting any information relating to the excess balance account to its Federal Reserve Bank upon request, including but not limited to, reports of participant balances in the account and the agent’s procedures for tracking participant balances and crediting interest payments. On an ongoing basis, the agent must provide its Federal Reserve Bank with all amendments to the Excess Balance Account Agreement that make additions to, or deletions from, the list of participants in the excess balance account managed by the agent. Top of Page Q: Can an institution be a participant in multiple excess balance accounts? A: No. An institution is limited to participating in only one excess balance account at a time. Top of Page Q: Can an institution act as agent for multiple excess balance accounts? A: No. An agent is limited to acting as agent for only one excess balance account. Top of Page Q: Must participants in an excess balance account be located in the same Federal Reserve District as the agent? A: No. The agent for the excess balance account may be located in a different Federal Reserve District than the participants in the excess balance account. The participants may also be located in different Federal Reserve Districts from each other. Top of Page This site is a product of the Federal Reserve Banks. Please see Legal Notices and Privacy Policy. Pages on this site marked (PDF) require the use of the Adobe® Acrobat® Reader® 6 or higher. Adobe also provides a more accessible download page. Address comments and questions to the Financial Services Webmaster. ©2010 Federal Reserve Banks ACCESS FEDLINE ACCESS TREASURY ABOUT US CONTACT US SERVICE STATUS Search: Access Solutions - FedLine Account Services Check ® BROWSE BY TOPIC FedACH ® FedCash Fedwire ® National Settlement Treasury Central Bank ® Home - Help - Excess Balance Account Frequently Asked Questions - Procedures for Establishing Excess Balance Accounts Service Offerings Service and Access Setup Operations Resources Events and Education News and Communications Help POPULAR CONTENT Rules and Regulations Forms Business Continuity Service Fees Holiday Schedules Industry Links MY QUICK LINKS Excess Balance Account Frequently Asked Questions RELATED CONTENT Excess Balance Account Resource Center Procedures for Establishing Excess Balance Accounts Interest on Reserves (Off-site Federal Reserve Financial Services is committed to providing the answers and information you need. Answers to many of our customers most frequently asked questions can be found using the links below. How to Calculate Required Reserve Balances and Excess Balances (PDF) (Off- If your question is not answered by the information provided on the site, My FedDirectorySM provides a comprehensive list of service and support contacts who can assist you. Whom should potential participants contact in order to participate in an excess balance account? Whom should prospective agents contact in order to serve as an excess balance account agent? After obtaining approval to serve as an agent, what additional steps must an agent and participating institutions take to establish the excess balance account? FedACH Services Education Must an agent submit a Board Resolution and Official Authorization List to establish an excess balance account? Fedwire Testing Opportunities When can institutions open an excess balance account? Check Adjustment Quick Reference Guide Where should participants submit completed forms? New Coin Information What records must the agent maintain? Check Restructuring What steps must a participant take to sever its relationship with the excess balance account agent, and in what time frame will the change be executed? Whom should agents or participants contact with additional questions? Q: Whom should potential participants contact in order to participate in an excess balance account? A: A prospective participant should contact an institution that acts or plans to act as an agent for an excess balance account. The institution contacted may, but need not, be the prospective participant’s correspondent. A prospective participant may also contact its Administrative Reserve Bank's excess balance account contact for more information about excess balance accounts. Top of Page Q: Whom should prospective agents contact in order to serve as an excess balance account agent? A: A prospective agent for an excess balance account should contact its Administrative Reserve Bank’s excess balance account contact. The prospective Link) site Link) Account Management Guide (PDF) Reserve Maintenance Manual (PDF) Account Services RULES AND REGULATIONS Regulation D (Off-site Link) GO agent should be prepared to provide a list of prospective participants in the excess balance account to its Administrative Reserve Bank. The Administrative Reserve Bank will verify that the agent and each of the participants are eligible to participate in an excess balance account. Upon receiving verification from its Administrative Reserve Bank, the agent may take the necessary steps to establish the excess balance account. Top of Page Q: After obtaining approval to serve as an agent, what additional steps must an agent and participating institutions take to establish the excess balance account? A: After obtaining approval to serve as agent for an excess balance account, the agent must submit to its Administrative Reserve Bank an executed Excess Balance Account Agreement, including Appendix A of the Excess Balance Account Agreement, for each participant. For detailed instructions on setting up an excess balance account, please visit Excess Balance Account Setup. Top of Page Q: Must an agent submit a Board Resolution and Official Authorization List to establish an excess balance account? A: No. The Board Resolution and the Official Authorization List that the agent submitted for its own master account will be used for excess balance account authentication. Top of Page Q: When can institutions open an excess balance account? A: The agent can begin the approval and agreement process immediately; however, actual excess balance accounts will not be opened prior to July 2, 2009. Top of Page Q: Where should participants submit completed forms? A: Participants must send a completed Appendix A of the Excess Balance Account Agreement to the agent. The agent will then forward the documents for all participants to the Administrative Reserve Bank. Top of Page Q: What records must the agent maintain? A: The agent must maintain daily records that reflect: 1) All participants in the excess balance account; 2) The total dollar amount of funds in the excess balance account; and 3) The dollar amount attributable to each participant in the excess balance account. (The sum of all participant balances must equal the total dollar amount of funds in the excess balance account.) The agent is also expected to maintain records that identify the accrued interest attributable to the excess balances of each participant and the amount of interest that each participant received. Top of Page Q: What steps must a participant take to sever its relationship with the excess balance account agent, and in what time frame will the change be executed? A: A participant may revoke its designation of an agent by submitting an executed Appendix B of the Excess Balance Account Agreement to the agent. The revocation will not be effective until the next business day after the duly executed Appendix B is received and accepted by the Federal Reserve Bank. Top of Page Q: Whom should agents or participants contact with additional questions? A: A prospective agent or participant may contact its Administrative Reserve Bank’s excess balance account contact. Top of Page This site is a product of the Federal Reserve Banks. Please see Legal Notices and Privacy Policy. Pages on this site marked (PDF) require the use of the Adobe® Acrobat® Reader® 6 or higher. Adobe also provides a more accessible download page. Address comments and questions to the Financial Services Webmaster. ©2010 Federal Reserve Banks ACCESS FEDLINE ACCESS TREASURY ABOUT US CONTACT US SERVICE STATUS Search: Access Solutions - FedLine Account Services Check ® BROWSE BY TOPIC FedACH ® FedCash ® Fedwire National Settlement Treasury Central Bank ® Home - Help - Excess Balance Account Frequently Asked Questions - Interest Payments Calculations Service Offerings Service and Access Setup Operations Resources Events and Education News and Communications Help POPULAR CONTENT Rules and Regulations Forms Business Continuity Service Fees Holiday Schedules Industry Links MY QUICK LINKS FedACH Services Education Excess Balance Account Frequently Asked Questions New Coin Information Check Restructuring Excess Balance Account Resource Center Interest Earnings Calculations and Payments Interest on Reserves (Off-site Federal Reserve Financial Services is committed to providing the answers and information you need. Answers to many of our customers most frequently asked questions can be found using the links below. How to Calculate Required Reserve Balances and Excess Balances (PDF) (Off- If your question is not answered by the information provided on the site, My FedDirectorySM provides a comprehensive list of service and support contacts who can assist you. How will interest earnings for the excess balance account be calculated? Will the Federal Reserve Bank calculate the excess balance account interest payments at a participant level? Will interest earned on excess balance account balances be credited to the agent’s master account? How will interest earnings in the excess balance account be disbursed? When will interest payments be credited to an excess balance account? Fedwire Testing Opportunities Check Adjustment Quick Reference Guide RELATED CONTENT Q: How will interest earnings for the excess balance account be calculated? A: The Federal Reserve Banks will calculate interest earnings on the aggregate balance in the excess balance account based on the average of end-of-day aggregate balances held in the account over the course of a seven-day maintenance period, beginning on a Thursday and ending on the following Wednesday. Aggregate balances in the excess balance account will earn interest at the excess balance rate set by the Board of Governors of the Federal Reserve System. For details on the formula used in the calculation, please visit www.reportingandreserves.org (Off-site Link). For current rates, please visit Interest on Required Reserve Balances and Excess Balances (Off-site Link). Top of Page Q: Will the Federal Reserve Bank calculate the excess balance account interest payments at a participant level? A: No. All interest will be calculated and paid to the excess balance account based upon the aggregate average balance held over the maintenance period. Top of Page Q: Will interest earned on excess balance account balances be credited to the agent’s master account? Link) site Link) Account Management Guide (PDF) Reserve Maintenance Manual (PDF) Account Services RULES AND REGULATIONS Regulation D (Off-site Link) GO A: No. Interest earned on the aggregate balance in the excess balance account will be credited directly to the excess balance account. Top of Page Q: How will interest earnings in the excess balance account be disbursed? A: The Federal Reserve pays interest on the aggregate balance in the excess balance account. A participant in an excess balance account and the agent must agree on the method for disbursing interest attributable to the participant. Top of Page Q: When will interest payments be credited to an excess balance account? A: Interest will be credited to the excess balance account fifteen (15) days after the end of each seven-day reserve maintenance period in which the interest was earned. Top of Page This site is a product of the Federal Reserve Banks. Please see Legal Notices and Privacy Policy. Pages on this site marked (PDF) require the use of the Adobe® Acrobat® Reader® 6 or higher. Adobe also provides a more accessible download page. Address comments and questions to the Financial Services Webmaster. ©2010 Federal Reserve Banks ACCESS FEDLINE ACCESS TREASURY ABOUT US CONTACT US SERVICE STATUS Search: Access Solutions - FedLine Account Services Check ® BROWSE BY TOPIC FedACH ® FedCash ® Fedwire National Settlement Treasury Central Bank ® Home - Help - Excess Balance Account Frequently Asked Questions - Excess Balance Account Policies and Procedures Service Offerings Service and Access Setup Operations Resources Events and Education Excess Balance Account Frequently Asked Questions Excess Balance Account Policies and Procedures POPULAR CONTENT Federal Reserve Financial Services is committed to providing the answers and information you need. Answers to many of our customers most frequently asked questions can be found using the links below. Rules and Regulations If your question is not answered by the information provided on the site, My FedDirectorySM provides a comprehensive list of service and support contacts who Forms can assist you. Business Continuity Service Fees Holiday Schedules Industry Links MY QUICK LINKS Excess Balance Account Resource Center Interest on Reserves (Off-site Link) News and Communications Help RELATED CONTENT Can participants or agents satisfy reserve balance requirements or contractual clearing balances with balances held in an excess balance account? To which institution(s) is the Federal Reserve Bank liable for funds in the excess balance account? Can an agent for an excess balance account commingle its own funds with those of the participants in the excess balance account? FedACH Services Education Can a participant in an excess balance account also have its own master account at a Federal Reserve Bank? Fedwire Testing Opportunities Who can transfer funds in and out of the excess balance account? Check Adjustment Quick Reference Guide What transactions settle in an excess balance account? New Coin Information Can an agent elect to have its excess balance account-related service fees settle in the excess balance account rather than in its master account? Check Restructuring What steps should an agent take if it wishes to have different staff members manage the excess balance account than those who are responsible for its master account? If an agent uses the same staff members to manage the excess balance account as the master account and wire transfer function, does it need to make any changes to its electronic access setup? Can a participant in an excess balance account view activity in the excess balance account with its FedLine access? Will the Federal Reserve Bank send agents and participants a statement at the end of each maintenance period indicating its balances maintained in the excess balance account and the interest those balances earned? Are excess balances maintained in excess balance accounts reportable on the Report of Transaction Accounts, Other Deposits, and Vault Cash (FR 2900)? Who is responsible for tax reporting to the Internal Revenue Service? Q: Can participants or agents satisfy reserve balance requirements or contractual clearing balances with balances held in an excess balance account? How to Calculate Required Reserve Balances and Excess Balances (PDF) (Offsite Link) Account Management Guide (PDF) Reserve Maintenance Manual (PDF) Account Services RULES AND REGULATIONS Regulation D (Off-site Link) GO A: No. Balances in an excess balance account cannot be used to satisfy a reserve balance requirement or a contractual clearing balance for either a participant or for the agent. Top of Page Q: To which institution(s) is the Federal Reserve Bank liable for funds in the excess balance account? A: Balances in the excess balance account represent a liability of the Federal Reserve Bank solely to the participants in the excess balance account. Excess account balances do not represent a liability to the agent for the excess balance account. Top of Page Q: Can an agent for an excess balance account commingle its own funds with those of the participants in the excess balance account? A: No. An agent for an excess balance account is not allowed to commingle any of its own funds in the excess balance account. Top of Page Q: Can a participant in an excess balance account also have its own master account at a Federal Reserve Bank? A: Yes. A participant in an excess balance account can have its own master account at the Federal Reserve Bank in the District in which it is located. Top of Page Q: Who can transfer funds in and out of the excess balance account? A: Only the agent can transfer funds (via Fedwire® Funds) into and out of the excess balance account to and from the agent’s master account on behalf of the participants; however, the agent must comply with any instructions from a participant about such transfers. Top of Page Q: What transactions settle in an excess balance account? A: The Fedwire Funds transactions between the agent’s master account and the excess balance account and interest earned on the aggregate (total) balance in the excess balance account settle in the excess balance account. Federal Reserve Financial Services charges settle in the master account of the agent for the excess balance account. Top of Page Q: Can an agent elect to have its excess balance account-related service fees settle in the excess balance account rather than in its master account? A: No. Account-related service fees can only settle in the agent's master account as required by the Excess Balance Account Agreement. Top of Page Q: What steps should an agent take if it wishes to have different staff members manage the excess balance account than those who are responsible for its master account? A: The excess balance account has an account number that differs from that of the agent’s own master account. The agent will need to have new FedLine® credentials issued for those individuals managing the excess balance account. The type of credential will depend on how far this separation of duties will be implemented. If the agent only separates accounting functions, the users should be given access to Account Management Information (AMI) and Service Charge Information (SCI). If the separation includes the ability to move funds into and out of the account (wire transfers), they will need a Funds Transfer specialist(s) and at least one Funds Transfer Supervisor and, as a result, they will receive a token. To issue these credentials, the Federal Reserve Bank will need new End User Authorization Contact (EUAC) forms (at least two new EUACs will need to be setup under the excess balance account) and Subscriber request forms for each person requiring access. Top of Page Q: If an agent uses the same staff members to manage the excess balance account as the master account and wire transfer function, does it need to make any changes to its electronic access setup? A: No. Staff will have the same electronic access capabilities with the excess balance account as they do with the existing master account, including wire transfers. Top of Page Q: Can a participant in an excess balance account view activity in the excess balance account with its FedLine access? A: No. Only the agent for the excess balance account can view activity in the excess balance account. Top of Page Q: Will the Federal Reserve Bank send agents and participants a statement at the end of each maintenance period indicating its balances maintained in the excess balance account and the interest those balances earned? A: The Federal Reserve Banks will provide this information to the agent for the excess balance account in the same manner as the agent currently receives information related to its master account. The Federal Reserve Banks will not provide this information directly to participants. Top of Page Q: Are excess balances maintained in excess balance accounts reportable on the Report of Transaction Accounts, Other Deposits, and Vault Cash (FR 2900)? A: Participants should not report balances maintained in an excess balance account on the participant’s Report of Transaction Accounts, Other Deposits, and Vault Cash (FR 2900). Excess balances maintained in an excess balance account represent a liability of a Federal Reserve Bank directly to the participant(s) in the excess balance account, and therefore are considered to be balances due from a Federal Reserve Bank. Balances due from a Federal Reserve Bank are excluded from the FR 2900 report. The agent for the excess balance account also does not include the balance in the excess balance account on its FR 2900 report. Top of Page Q: Who is responsible for tax reporting to the Internal Revenue Service? A: The agent of the excess balance account must submit any required tax reporting of the interest payments paid to the participants in the excess balance account. Top of Page This site is a product of the Federal Reserve Banks. Please see Legal Notices and Privacy Policy. Pages on this site marked (PDF) require the use of the Adobe® Acrobat® Reader® 6 or higher. Adobe also provides a more accessible download page. Address comments and questions to the Financial Services Webmaster. ©2010 Federal Reserve Banks