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How to Calculate Required
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If your question is not answered by the information provided on the site, My
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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?

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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?

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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

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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.
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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?

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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?

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What are the agent's responsibilities for reporting to the Federal Reserve
Bank?

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Can an institution be a participant in multiple excess balance accounts?

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Must participants in an excess balance account be located in the same
Federal Reserve District as the agent?

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Excess Balance Account
Resource Center

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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

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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

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©2010 Federal Reserve Banks

ACCESS FEDLINE

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Excess Balance Account Frequently Asked
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RELATED CONTENT
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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

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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

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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

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ABOUT US

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Payments Calculations

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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?

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site Link)

Account Management Guide
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Regulation D (Off-site Link)

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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

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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)

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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