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federal reserve

Ba n k o f Dallas

DALLAS, TEXAS

75222
Circular No. 83-28
February 25, 1983

REGULATION D
RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS
TO ALL DEPOSITORY INSTITUTIONS IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
The Board of Governors of the Federal Reserve System has announced
final approval of a change to contemporaneous reserve requirem ents (CRR) to
become effective February 2, 1984. The atta ch e d press release dated October 5,
1982 provides information regarding the history and rationale of CRR imple­
mentation, as well as a sta te m e n t of seven principal featu res of CRR. Also
included is a chart illustrating reserve maintenance procedures under CRR
compared with the present reserve accounting system.
The related Federal
R egister document is also attached.
If you have any questions, please co ntact Allan Neale, (214) 651-6334
a t the Head Office; Javier Jimenez, (915) 544-4730 a t the El Paso Branch;
Rodney Franklin, (713) 659-4433 at the Houston Branch; or P ete Castleberry,
(512) 224-2141 a t the San Antonio Branch.
Additional copies of this circular will be furnished upon request to the
Public Affairs D epartm ent, Extension 6289.
Sincerely yours,

William H. Wallace
First Vice President

B a n k s a n d o t h e r s a r e e n c o u r a g e d to use th e fo llo w in g in c o m in g W A T S n u m b e r s in c o n t a c t in g th is Ban k:
1 -800-442 -714 0 ( in tr a s t a te ) a n d 1-800-527 -920 0 (in te r s ta te ). F o r c a lls p la c e d lo cally , p l e a s e u s e 651 plus th e
e x te n s io n r e fe rre d to ab ove.

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

FEDERAL RESERVE press release
For immediate release

October 5, 1982

The Federal Reserve Board today announced final approval of a
change —

from lagged to contemporaneous reserve requirements

(CRR) —

in the

way depository institutions maintain reserves.
The change will become effective February 2, 1984.

At that time,

medium sized and larger depository institutions will begin posting reserves on
transaction
delay.

accounts with a two-day rather than the current two-week accounting

(Transaction accounts include checking, NOW, automatic transfer and

share draft accounts.)

Reserve requirements on nontransaction liabilities will

be met on a lagged basis, as described below.
The Board acted after consideration of comment received on proposals
published in November 1981 and after extensive staff study during the past
several years.

The Board decided in principle on June 28, 1982 to adopt

contemporaneous reserve requirements on transaction deposits, but left open for
later decision the questions of an effective date and whether reserve periods for
different sets of institutions should be placed on a staggered basis , with half
the institutions settling every other week.

The Board has decided against

staggering settlement periods.
It is expected that contemporaneous reserve requirements will improve
the implementation of monetary policy to a degree by strengthening the linkage
between reserves held by depository institutions and the money supply.
noted that sizable slippages will remain between reserves and money,

The Board

as short-run

flows are inherently volatile.
Under the present lagged reserve system, depository institutions
must post their required reserves in any given week based on their deposit levels
two weeks earlier.

-

4-

The effective date was placed 16 months ahead to give both Reserve
Banks and the depository institutions that will maintain reserves on the new
basis time to make the adjustments required in their administrative and data
processing procedures.
As adopted by the Board, the principal features of CRR, set forth
below, are for the most part those proposed in November 1981:
1.

Contemporaneous reserve requirements will apply only to
institutions reporting their deposits on a weekly basis.
(Certain institutions with $15 million or less in total
deposits report deposits and calculate required reserves
quarterly, and certain others, with reservable liabilities
under $2 million, will be exempt from reserve requirements
upon enactment of legislation now awaiting the President's
signature (H.R. 6267)).

2.

Reserves will be maintained over two-week periods that will
continue to end on a Wednesday.

3.

All institutions subject to CRR will settle their reserve
accounts on the same day.

4.

Required reserves will be computed on the basis of average
deposits over a two-week computation period ending on
Monday.
Reserves required to be posted against transaction
accounts will be maintained in the two-week period ending on
Wednesday, two days after the end of the computation period.
The two-day interval provides time for calculation of
required reserves.

5.

Required reserves for other liabilities against which reserves
must be held — such as certain kinds of time deposits — will
also be computed on the basis of average deposits over a
two-week period ending on Monday, but the reserves required
will be posted in the two-week maintenance period beginning
17 days later, on a Thursday.

6.

Vault cash eligible to be counted as reserves will be equal
to vault cash holdings during the computation period ending
17 days before the beginning of the maintenance period.

7.

To assist depository institutions in implementing CRR the
Board adopted transition periods for the carryover of
reserve balance deficiencies or surpluses.
During the first
six months following the start of CRR, reserve surpluses or
deficiencies that may be carried over into the next reserve
period will equal the greater of 3 percent of the daily average
level of required reserves (including required clearing balances)

-

5-

or $25,000.
During the next six months, the permissible
carryover will equal the greater of 2 1/2 percent of daily
average required reserves or $25,000.
Thereafter, the
carryover is the greater of 2 percent of daily average
required reserves or $25,000.
These changes in reserve requirements will be made as amendments to
the Board's Regulation D —

Reserve Requirements of Depository Institutions —

to

be published in a Federal Register notice and made available by the Reserve
Banks to all depository institutions, and upon request, to others.
The Board approved two other amendments to Regulation D to be spelled
out in the forthcoming Federal Register notice:
—

The dates on which non-member depository institutions
phasing in to the reserve requirements of the Monetary
Control Act over an eight-year period will be moved back
one week, so as to avoid falling in the middle of a
reserve maintenance period under the CRR schedule.

—

Depository institutions with less than $15 million
deposits and that are not subject to CRR will continue
to have a one-week maintenance period, with settlement
day on Wednesday.
Their computation week each quarter
will be shifted back two days from Wednesday to Monday,
to align with the computation period of institutions
subject to CRR.

The attached chart illustrates reserve maintenance under CRR,
compared with the present reserve accounting system.

Attachment

P R E SE N T ,

AND APPROVED,

RESERVE ACCOUNTING SYSTEMS

Present Lagged Reserve Accounting System
week 1
______
T W
1

TtiF
1

S

SuM

T W

1 1 1 1 1
1-week computa­
tion period for
all reservable
liabilities and
vault cash

_____ week 2

______ week 3_____

Hi F

S

Su M

T W

1

1

1

1

1

1

ThF
1

S

SuM

T W

1

1

1

1

1

1-week mainte­
nance period
for all reserv­
able liabilities
and vault cash

Approved CRR Accounting System
week 1

week 2

week 5

week 3

I I

I f
W

Th F

S

■+ - M M

Su M

T

W

Th F

" !■ I I I I

S

II

Su M

II

T

'i

W *Th F

S

SuM

1 It

I II

r

week 6

T W

Hi F

I II

S

SuM

T W

I I I I -t-+

2-week maintenance period for non­
transactions liabilities and vault
cash
__________

2-week maintenance period for trans­
actions deposlta_____________________

*February 2, 1984

-

9-

FEDERAL RESERVE SYSTEM
[12 CPR Part 204]
Regulation D
[Docket No. R-0371]
RESERVE REQUIREM
ENTS OF DEPOSITORY INSTITUTIONS
Contemporaneous Reserve Requirements
AGENCY:

Board o f Governors of the Federal Reserve System.

ACTION:

F inal r u le s .

SU M R : The Board o f Governors has amended R egulation D—Reserve Requirements
M AY
o f D epository I n s t it u t io n s (12 CFR Part 204) to modify the manner in
which d ep ository i n s t it u t io n s m aintain required r e s e r v e s . The changes
adopted by the Board w i l l introduce contemporaneous reserve requirements
on tra n sa ctio n accounts for medium-size and larger d ep ository in s t i t u t i o n s
in stea d o f the lagged system now in e f f e c t . Under the Board's a c tio n ,
d ep o sito ry i n s t it u t io n s that have t o t a l d e p o sits of $15 m illio n or more,
Edge and Agreement co rp o ra tio n s, and U.S. branches and a g en cies of foreign
banks w i l l be required to m aintain required reserv es on tra n sa ctio n
accounts on a d a ily average b a sis for a fourteen -day maintenance period
ending on the f i r s t Wednesday a f te r the fourteen-d ay computation p eriod ,
which ends on a Monday. Thus, the reserve maintenance period for tra n sa ctio n
accounts w i l l be lagged by o n ly two days from the end o f the reserve
computation period for tra n sa ctio n accounts. The fourteen-day reserve
maintenance period for nonpersonal time d e p o sits and Eurocurrency l i a b i l i t i e s
w i l l begin seventeen days a fter the end o f the corresponding fo u r teen day reserve computation p eriod . C urrently, an i n s t i t u t i o n su b ject to
the new requirement m aintains i t s required reserv es on a d a ily average
b a s is over a seven-day period ending on a Wednesday two weeks subsequent
to the reserve computation p eriod . To ease the t r a n s it io n to t h i s new
procedure for reserve maintenance, a llo w a b le carryover o f e x c e sse s or
d e f ic ie n c ie s in reserve balances w i l l be in creased tem porarily from
2 per cent to 3 per cent but w i l l phase down to 2 per cent over a oneyear period. The Board a ls o has e s ta b lish e d a minimum carryover amount
o f $25,000. The Board b e lie v e s that shortening the la g between the
computation and maintenance of required reserves on tra n sa ctio n accounts
w i l l enhance the aonduct of monetary p o lic y by stren gth en in g the link age
between the supply o f reserves and the money supply.
EFFECTIVE DATE: February 2, 1984. This date i s the beginning o f the
f i r s t reserve maintenance period to which contemporaneous reserve requirements
w i l l apply.

-

10-

FOR FURTHER INFORM
ATION CONTACT: G ilb ert T. Schwartz, A sso cia te General
Counsel (202/452 -36 25), or Paul S. P il e c k i, Senior Attorney (202/452­
3 2 8 1 ), Legal D iv is io n , Board o f Governors of the Federal Reserve System,
Washington, D.C. 20551.
SUPPLEM
ENTARY INFORMATION: In order to s a t i s f y the reserve requirements
imposed under the current p r o v isio n s of R egulation D—Reserve Requirements
o f D ep ository I n s t it u t io n s (12 CFR Part 204), d ep o sito ry i n s t i t u t i o n s
that have t o t a l d e p o sits of $15 m illio n or more, Edge and Agreement
co rp o ra tio n s, and U.S. branches and agen cies of fo reig n banks are required
to m aintain reserve balances at Federal Reserve Banks on a d a ily average
b a s is over a seven-day reserve maintenance period ending on Wednesday.
The amount of reserves that are required to be m aintained during a given
reserv e maintenance week are based upon the l e v e l o f the i n s t i t u t i o n ' s
d a ily average d e p o sits during the seven-day reserve computation period
which begins on a Thursday two weeks prior to the beginning o f a given
reserve maintenance week. United S ta t e s currency and co in held during
the reserve computation period are deducted from the balances that are
required to be m aintained a t the Reserve Bank during the corresponding
reserv e maintenance week. D epository i n s t i t u t i o n s with to t e d , d ep o sits
o f l e s s than $15 m illio n g e n e r a lly are su b ject to a q u a rterly procedure
for reporting d e p o sits and m aintaining r e s e r v e s .
In connection w ith a proposal in June 1980 to r e v is e Regulation D
to implement the Monetary Control Act of 1980 ( T i t le I of Pub. L. 96­
2 2 1 ), the Board requested comment on the iss u e as to whether reserves
should be maintained on a contemporaneous b a s is (45 Fed. Reg. 38388).
When R egulation D was rev ised in August 1980 (45 Fed. Reg. 56069),
the Board s ta te d th at i t was disposed toward returning to contemporaneous
reserv e requirements ("CRR" ), i f a further in v e s t ig a t io n o f p o te n tia l
o p eration al d i f f i c u l t i e s in d ica ted th at such a system was p r a c t ic a l.
Among the is s u e s to be stu d ied were the f e a s i b i l i t y o f such a reserve
accounting system for a l l types of d ep o sito ry i n s t i t u t i o n s , p o te n t ia l
com p lication s a r is in g from pass-through arrangements, and the r e la t io n
t o reserve carryover. The Board, a fte r co n sid erin g th e se i s s u e s , requested
p u b lic comment in November 1981 on a proposal th a t would implement a
procedure o f contemporaneous reserve requirements (46 Fed. Reg. 58185).
Under the p rop osal, the reserve computation period would cover
the fourteen-day period beginning Tuesday and ending on the second Monday
th e r e a ft e r . The corresponding reserve maintenance period for tran sa ctio n
accounts would begin on the Thursday immediately a f te r the s t a r t of
the reserve computation period and would end on the Wednesday immediately
a fte r the end o f the reserve computation p eriod . For a l l other reservable
l i a b i l i t i e s , such as nonpersonal time d ep o sits and Eurocurrency l i a b i l i t i e s ,
the corresponding reserve maintenance period would begin seventeen days
a fte r the end o f the corresponding reserve computation p eriod . Reserve
requirements would continue to be computed based upon the d a ily average
d ep o sits outstanding during the reserve computation p eriod . Reserve
requirements would be required to be s a t i s f i e d (1) by the U.S. currency

-

11-

and co in held by the i n s t i t u t i o n on a d a ily average b a sis during the
fourteen -d ay reserve computation period which begins on a Tuesday, 30
days prior to the beginning o f a reserve maintenance p eriod , and (2)
by balances maintained with a Federal Reserve Bank on a d a ily average
b a s is during the fourteen-day reserve maintenance period which begins
two days a fte r the beginning o f the reserve computation period for tra n sa ctio n
accounts and which begins 30 days a fte r the beginning o f the reserve
computation period for a l l other reserv a b le l i a b i l i t i e s .
An i n s t i t u t i o n would continue to be perm itted to carry forward
t o the fo llo w in g fourteen-day reserve maintenance period e x c e sse s or
d e f ic ie n c ie s up to 2 per cent of i t s required r e s e r v e s . The proposed
procedure for reserve maintenance would apply t o d ep ository in s t it u t i o n s
that have t o t a l d e p o sits of $15 m illio n or more, a l l Edge and Agreement
co rp o ra tio n s, and a l l U.S. branches and ag en cies of fo reig n banks su b ject
to reserve requirements under R egulation D.
The Board receiv ed approximately 180 comments from the p u b lic
on the proposed, p rim arily from d ep ository i n s t i t u t i o n s and th e ir in d u stry
trade groups. Those commenting in favor of CRR g e n e r a lly expressed
the view that the b e n e fits of improved monetary c o n tr o l and consequent
improvements in the n ation a l economy would overrid e any c o s t s that would
be imposed on d ep ository i n s t i t u t i o n s and the Federal R eserve. Commentators
g e n e r a lly were opposed to CRR on the grounds that i t would improve monetary
co n tro l only in the short run and th at the b e n e f its over a longer period
would be minimal. Commentators a ls o s ta te d th at th e ir view th at the
b e n e fits of CRR would not be outweighed by the su b s ta n tia l in creases
in c o s t s , in clu d in g th e se r e la te d to r e v is io n s of d ep osito ry i n s t i t u t i o n s '
e x is t in g procedures for c o ll e c t in g data on d e p o s it s , m onitoring d e p o s its ,
and managing r e s e r v e s . However, the range o f estim a tes provided to
the Board for i n i t i a l and continuing c o s ts varied w id ely .
With resp ect to comments on p a rticu la r elements of the proposal,
such comments g e n e r a lly opposed as being too sh ort a two-day la g between
the end o f the reserve computation and maintenance p e r io d s, favored
in c r e a sin g such periods to two weeks or longer as f a c i l i t a t i n g the management
o f reserve p o s it io n s , and favored expanding the amount of ex cesses or
d e f ic ie n c ie s in reserve balances that may be ca rried over from one reserve
maintenance period to another. Other is s u e s were commented upon l e s s
fr e q u e n tly . These comments in d ica ted th a t CRR would com plicate reserve
balance pass-through procedures, suggested th at there would be a need
fo r l i b e r a li z a t io n o f the Federal R eserv e's p o lic y regarding a s -o f adjustments
to reserve accounts, and favored implementation o f CRR on a l l reservab le
l i a b i l i t i e s rather than only on tra n sa ctio n accounts in order to reduce
con fusion and c o s t burdens.
After con sid eration o f a l l of the comments r eceiv e d , the Board
has determined to adopt the procedure o f CRR s u b s ta n t ia lly in the form
proposed. The Board b e lie v e s that the improvements in monetary co n tro l
to be gained by CRR outweigh the c o s ts to d ep ository i n s t i t u t i o n s .
The CRR procedure w i l l become e f f e c t i v e in February 1984. This w il l
provide d ep ository in s t it u t i o n s s u f f i c i e n t time to modify th e ir accounting

-

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systems and procedures to implement CRR. In a d d itio n , in order to a s s i s t
d ep o sito ry i n s t i t u t i o n s as they a d ju st th e ir op erations to the new reserve
maintenance procedures, the Board has provided for a temporary in crease
in the amount of allow able carryover of e x cesses or d e f ic ie n c ie s of
reserve balances (includng required c le a r in g b a la n c e s). In t h i s regard,
a llow ab le carryover w i l l be 3 per cent of required reserv es for the
f i r s t reserve maintenance period under CRR and for a l l maintenance p eriod s
during the f i r s t s i x months fo llo w in g im plem entation. Allowable carryover
w i l l be reduced to 2-1/2 per cent of required reserv es over the subsequent
six-m onth p eriod . Approximately one year a fte r implementation o f CRR,
a llow ab le carryover w i l l return to 2 per cent of required r e se r v e s.
In order to a s s i s t sm all d ep ository i n s t i t u t i o n s , the Board has adopted
a minimum carryover amount of $25,000. Thus, an i n s t i t u t i o n ' s carryover
w i l l be the larger of the a p p lica b le percentage (3, 2 - 1 /2 , or 2) or
$25,000.
Under the new procedure, an i n s t i t u t i o n su b ject to CRR w i l l
be required to m aintain a reserve balance at the Federal Reserve (d ir e c tly
or on a pass-through b a sis) on a d a ily average b a sis during the fo u rteen day reserve maintenance period beginning Thursday, February 2, 1984,
and ending on Wednesday, February 15, 1984, based upon d a ily average
tr a n sa c tio n accounts held during the fourteen day reserve computation
period beginning Tuesday, January 31, 1984, and ending Monday, February 13,
1984, and upon d a ily average nonpersonal time d e p o s it s , Eurocurrency
l i a b i l i t i e s , and other reserv a b le l i a b i l i t i e s during the fourteen-day
reserve computation period beginning Tuesday, January 3, 1984, and ending
Monday, January 16, 1984, a fte r deducting the d a ily average amount of
the i n s t i t u t i o n ' s currency and coin m aintained during the fourteen-day
computation period beginning Tuesday, January 3, 1984, and ending Monday,
January 16, 1984.
An i n s t i t u t i o n su b ject to CRR holding tra n sa ctio n accounts
or nonpersonal time d ep o sits w i l l continue to f i l e a report of d ep o sits
each week w ith the Federal Reserve Bank o f i t s D i s t r i c t . Each report
w i l l r e f l e c t d a ily data for tra n sa ctio n accounts and other reserv ab le
l i a b i l i t i e s as of the c lo s e o f b u sin ess for each day o f the Tuesday
through Monday rep ortin g week. Although the reserve maintenance periods
foe tra n sa ctio n accounts and for other reserv a b le l i a b i l i t i e s w i l l not
c o in c id e , a l l weekly rep orts w i l l r e f l e c t data for d ep o sits a c tu a lly
h eld during a p a rticu la r rep ortin g period.
The Board has considered the impact of CRR on sm all d ep ository
i n s t i t u t i o n s in accordance with s e c tio n 604 o f the R egulatory F l e x i b i l i t y
Act (5 U.S.C. § 6 0 4 ). The Board has determined that d ep osito ry in s t i t u t io n s
that have t o t a l d ep o sits of l e s s than $15 m illio n w i l l continue to report
d e p o sits and maintain reserves on a q u arterly b a sis under the lagged
system now in e f f e c t for such sm aller i n s t i t u t i o n s . However, any i n s t it u t io n
that e le c t s to fo llo w the standard, rather than the q u a rterly procedures,
w i l l report d ep o sits and m aintain reserv es under the contemporaneous

-

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procedure. I n s t it u t io n s that report on a q u a rterly b a sis w i l l report
d e p o sits for reserve requirement purposes for one seven-day period each
quarter beginning on a Tuesday and ending on a Monday. Since the reserve
maintenance period for q u arterly rep o rters has not been m odified , such
i n s t i t u t i o n s w i l l continue to s e t t l e th e ir reserve accounts every Wednesday.
Documents p resen tin g an a ly ses o f ad te r n a tiv e procedures for the implementation
o f CRR are a v a ila b le through the Board's Freedom of Inform ation O ffic e
(202/452-2407).
The Board i s taking t h i s a ctio n in order to enhance the conduct
o f monetary p o lic y . I t i s a n tic ip a te d that a sh orten in g o f the la g
between the oorapututation and maintenance o f required reserv es on tra n sa ctio n
accounts w i l l tig h ten the lin k age between the supjply o f reserv es to
the d ep ository system and the money stock and thereby enhance the e f f e c t iv e n e s s
o f monetary p o lic y .
LIST O SUBJECTS IN 12 CFR PART 204
F
Banks, banking; Currency; Federal Reserve System; P e n a ltie s ;
Reporting requirem ents.
Pursuant to i t s a u th o rity under s e c tio n s 19, 25 and 25(a)
o f the Federal Reserve Act (12 U.S.C. §§ 461, 601 e t s e q ., 611 e t se g . )
and under s e c tio n 7 o f the In te r n a tio n a l Banking Act of 1978 (12 U.S.C.
§ 3 10 5), e f f e c t i v e February 2, 1984, the Board amends R egulation D (12
CFR Part 204) as fo llo w s:
1. In s e c tio n 2 0 4 .2 (h ), fo o tn o te 1 i s amended by d e le t in g
the word "fourth" and in s e r tin g in i t s p lace the word "second".
2. In s e c tio n 204.3, paragraphs ( c ) , ( d ) , and (h) are rev ised
to read as fo llo w s:
SECTION 204.3 — COM
PUTATION AND M
AINTENANCE
*
(c)

*

*

*

*

Computation o f required r e se r v e s.

(1)
Required reserv es are computed on the b a s is of d a ily
average balances of d ep o sits and Eurocurrency l i a b i l i t i e s during a fo u rteen day period ending every second Monday (the "computation p eriod " ). Reserve
requirements are computed by applying the r a t io s prescrib ed in s e c tio n 204.9
to the c la s s e s of d ep o sits and Eurocurrency l i a b i l i t i e s of the i n s t i t u t i o n .
The reserve balance th at i s required to be maintained with the Federal
Reserve s h a ll be maintained during a fourteen-day period (the "maintenance
period") which begins on a Thursday and ends on the second Wednesday
ther eaf t e r .

-

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(2) A reserve balance s h a l l be m aintained during a given
maintenance p eriod , based
(i) on the d a ily average net tra n sa ctio n accounts
held by the d ep ository i n s t i t u t i o n during the computation period th at
began immediately prior to the beginning o f the maintenance period;
and
( i i ) on the d a ily average nonpersonal time d ep o sits
and d a ily average Eurocurrency l i a b i l i t i e s held by the d ep ository i n s t it u t i o n
during the computation period th a t ended seventeen days prior to the
beginning o f the maintenance p eriod .
(3) In determining the reserve balance th at i s required
to be maintained with the Federal R eserve, the d a ily average v a u lt cash
held during the computation period th a t ended seventeen days prior to
the beginning o f the maintenance period i s deducted from the amount
of the i n s t i t u t i o n ' s required r e s e r v e s .
(d)
S p ecia l ru le for d ep ository i n s t i t u t i o n s th at have t o t a l
deposi ts o f l e s s than $15 m illio n .
(1) A d ep ository i n s t i t u t i o n with t o t a l d e p o sits of
l e s s than $15 m illio n s h a l l f i l e a report of d eposits, once each calendar
quarter for a seven-day computation period th at begins on the th ird
Tuesday o f a given month during the calendar q u arter. Each Reserve
Bank s h a l l d iv id e the d ep ository in s t i t u t i o n s in i t s D i s t r i c t th at q u a lify
under t h i s paragraph in to three s u b s t a n t ia lly equal groups and a ssig n
each group a d iff e r e n t month to report during each calendar q uarter.
(2) Required reserv es are computed on the b a sis of the
d ep o sitory i n s t i t u t i o n ' s d a ily average d e p o sit balances during the sevenday computation p eriod . In determining the reserve balance that a d ep ository
i n s t it u t i o n i s required to m aintain with the Federal R eserve, the d a ily
average v a u lt cash held during the computation period i s deducted from
the amount of the i n s t i t u t i o n ' s required r e s e r v e s . The reserve balance
th a t i s required to be maintained w ith the Federal Reserve s h a ll be
m aintained during a corresponding period th a t begins on the fourth Thursday
fo llo w in g the end o f the i n s t i t u t i o n ' s computation period and ends on
the fourth Wednesday a fte r the c lo s e o f the i n s t i t u t i o n ' s next computation
p erio d . Such reserve balance s h a l l be maintained in the amount required
on a d a ily average b a sis during each week o f the q u arterly reserve maintenance
p eriod .
(3)

* * *

(4) A d ep ository i n s t i t u t i o n t h a t q u a l i f i e s under t h i s
paragraph may e l e c t at the beginning o f a calendar year to report d ep o sits
on a weekly b a sis and m aintain reserv es during fourteen-day reserve
maintenance periods in accordance with paragraph (c) o f t h i s s e c tio n .
*

*

*

*

*

-

15-

(h) Carryover o f e x c e s se s or d e f ic ie n c i e s .
(1) For a d ep ository
i n s t i t u t i o n computing required reserv es under paragraph (c) o f t h is
s e c t io n , any ex c e ss or d e fic ie n c y in a required reserve balance for
any maintenance period th at cbes not exceed the greater of the percentage
s e t fo r th in the schedule below of the i n s t i t u t i o n ' s required reserv es
(Including required c le a r in g balances) or $25,000, s h a ll be carried
forward to the next maintenance p eriod .
Percentage applied to
determine allow ab le
carryover

Reserve maintenance periods
occurring between
February 2, 1984 and August 1 , 1984

3

August 2, 1984 and January 30, 1985

2 - 1/2

January 31, 1985 and forward

2

(2) For a d ep ository i n s t i t u t i o n rep ortin g d e p o sits
and m aintaining required reserv es under paragraph (d) o f t h is s e c tio n ,
any e x c e s s or d e fic ie n c y in a required reserve balance for any maintenance
period that does not exceed the greater of 2 per cent of the i n s t i t u t i o n ' s
required reserves (in clu d in g required c le a r in g balances) or $25,000,
s h a l l be carried forward to the next maintenance p erio d .
(3) Any carryover not o f f s e t during the next period
may not be ca rried forward to a d d itio n a l p erio d s.

3.
as fo llow s:

S ectio n 204.4 i s amended by r e v is in g the schedule in paragraph
SECTION 204.4 — TRANSITIONAL ADJUSTMENTS
*
(a)

*

*

*

*

*

*

*

Reserve maintenance periods
occurring

Percentage th at computed
reserves w i l l be reduced

November 13, 1980 to
September 2, 1981

87.5

September 3, 1981 to
September 1 , 1982

75

September 2, 1982 to
August 31, 1983

62.5

September 1, 1983 to
September 12, 1984

50

September 13, 1984 to
September 11, 1985

37.5

September 12, 1985 to
September 10, 1986

25

September 11, 1986 to
September 9, 1987

12. 5

September 10, 1987 and forward

0

4.
In the th ir d sentence o f s e c tio n 2 0 4 . 7 ( a ) ( 1 ) , by d e le t in g
the word "computation" and in s e r tin g the word "maintenance" in i t s p lace,
By order of the Board o f Governors, October 5 , 1982.
(signed) William W W iles
.

William W W iles
.
S ecretary of the Board

[SEAL]