The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
F ederal R eserve Bank OF DALLAS W ILLIAM H. W ALLACE DALLAS, TEXAS 75222 F IR S T V IC E P R E S ID E N T December 31, 1985 C i r cu l ar 85-157 TO: All dep os ito ry i n s t i t u t i o n s in the Eleventh Federal Reserve D i s t r i c t SUBJECT Regulation D - Reserve Requirements o f Depository In s titu tio n s DETAILS The Board of Governors of the Federal Reserve System has announced amendments to Regulation D in cr eas in g the amount of net t r a n s a c t i o n accounts to which the 3 percent reserve requirement will apply in 1985 from $29.8 m il li o n to $31.7 m i l l i o n . The Board al so increased the amount of re se rv ab le l i a b i l i t i e s in depos itor y i n s t i t u t i o n s t h a t are su b je c t to a zero percentage reserve requirement from $2.4 mi ll io n to $2.6 m i l l i o n . These changes will be e f f e c t i v e f or FR-2900 weekly r ep o rt in g i n s t i t u t i o n s s t a r t i n g with the re serve computation period beginning- on December 31, 1985, and with the corresponding rese rv e maintenance periods beginning January 2, 1986, f o r net t r a n s a c t i o n accounts, and on January 30, 1986, f o r ot her re se rv ab le l i a b i l i t i e s . For i n s t i t u t i o n s t h a t r e p o r t the FR-2900 q u a r t e r l y , the tranche adjustment and the exemption will be e f f e c t i v e with the computation period beginning on December 17, 1985, and with the reserve maintenance period beginning January 16, 1986. ATTACH ENTS M Board's press r e l e a s e and the r e l a t e d Federal Re gister document. M R INFORM OE ATION For f u r t h e r information, please c on ta ct 651-6690 or Evelyn E. Thomas a t (214) 651-6132. Robert G. Feil a t (214) Sin cerely yours, For additional copies of any circular please contact the Public Affairs Department at (214) 651-6289. Banks and others are encouraged to use the following incoming WATS numbers in contacting this Bank (800) 442-7140 (intrastate) and (800) 527-9200 (interstate). This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) December 5, 1985 For immediate r e l e a s e The Federal Reserve Board today announced an i n c r e a s e in t h e amount of net t r a n s a c t i o n accounts to which t h e 3 percent re serve requirement w i l l apply in 1985 from $29.8 m il l i o n t o $31.7 m i l l i o n . The Board al so incr eased th e amount of r e se r v a b l e l i a b i l i t i e s in depository i n s t i t u t i o n s t h a t are s u b je ct to a zero percentage re ser ve requirement from $2.4 m i ll io n t o $2.6 m i l l i o n . These adjustments take e f f e c t beginning December 31, 1985. The Board made the changes in accordance with pr ov isi ons of t h e Monetary Control Act. The Act r eq ui res the Board t o amend i t s Regulation D--Reserve Requirements of Depository I n s t i t u t i o n s - - a n n u a l l y t o i n c r e a s e t h e amount of t r a n s ac t i o n accounts su b je ct to a 3 percent reserve requirement. The annual a d j u s t ment must be 80 percent of the annual percentage i n c r e a s e in t r a n s a c t i o n accounts held by a l l depository i n s t i t u t i o n s . The growth in t o t a l net t r a n s a c t i o n accounts of a l l depos itor y i n s t i t u t i o n s from June 30, 1984 t o June 30, 1985 was 8.1 p e r c e n t . The s t a t u t o r y r u l e thus re q u i re s an i n cr ea se of $1.9 m il li on over l a s t y e a r ' s amount t o $31.7 m i l l i o n . The Board is required by th e Garn-St Germain Depository I n s t i t u t i o n s Act of 1982 t o amend Regulation D t o a d j u s t t he amount exempt from reserve requirements f o r the upcoming y e a r by 80 percent of the annual percentage i n c r e a s e in t o t a l r es er v ab l e l i a b i l i t i e s . Growth in t o t a l r es er v ab l e l i a b i l i t i e s was 9.1 perc ent from June 30, 1984 t o June 30, 1985, r e q u i r i n g an i n cr ea se in the reserve requirement exemption t o $2.6 m i l l i o n . The Board w i l l al so change th e bas is of the r e p o r ti n g cut o f f level ( c u r r e n t l y $25 m i ll io n in t o t a l d e p o s i t s ) which i s used to s e p a r a t e weekly (over) reporters from quarterly reporters. The new basis w ill be Indexed t o 80 percent of the annual percentage Increase 1n to ta l deposits and other reservable lia b ilitie s. The annual adjustment of t h is basis wi l l be computed as of June 30 of each year. The Board's notice i s attached. - Attachment 0- FEDERAL RESERVE SYSTEM 12 C.F.R. Part 204 [Regulation D? Docket No. R-0561] RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS Reserve Requirement Ratios AGENCY; Board of Governors of the Federal Reserve System. ACTION: Final rule. SUMMARY: The Board (Regulation D — (1) to accounts subject percent, as $31.7 to (12 U.S.C. and the reserve by 12 Requirements increase a required million? amending Reserve Institutions): Reserve Act is Part of amount requirement section increase the 204 Depository of transaction ratio 19(b)(2)(C), § 461(b)(2)(C)), (2) to CFR of of the three Federal from $29.8 million amount of to reservable liabilities of each depository institution that is subject to a reserve requirement 1 9 ( b ) (11)(B) of of the zero percent, Federal as Reserve required Act (12 by U.S.C. § 4 6 1 ( b ) (11)(B)), from $2.4 million to $2.6 million. is also changing the (currently $25 million basis in of the reporting "total deposits"), The Board cutoff which separate weekly reporters from quarterly reporters, section level is used to from "total deposits" to "total deposits and other reservable liabilities." EFFECTIVE DATE: December 31, 1985. - 2- FOR FURTHER INFORMATION CONTACT: General Counsel Attorney (202/452-3625), (202/452-3778), Legal Oliver Reserve Act with the INFORMATION: requires Federal Division, transaction prescribed and Board percent each accounts of $25 million or transaction reserves accounts The above and $25 at each year that Federal to maintain its deposits, were as reserve set total at three transaction 12 percent million. further provides that the Board shall December 31 of the initial institution's less of against time section 19(b)(2) depository Senior 20551. institution regulations. imposed under for System D.C. nonpersonal requirements Associate Board of Governors of 19(b)(2) each depository accounts by Section Reserve Ireland, or John Harry Jorgenson, the Federal Reserve System, Washington, SUPPLEMENTARY I. on Section total 19(b)(2) issue a regulation before adjusts for the next calendar year the total dollar amount of the transaction account tranche against which reserves must percent. The increase the percentage be maintained at a ratio of three in the tranche increase in total is to be 80 percent transaction accounts of for all depository institutions determined as of June 30 of each year. Currently, the amount of the transaction accounts is $29.8 million. net June transaction accounts 30, 1984, to June of all 30, 1985, the Board is amending was tranche on The growth in the total depository $396.6 billion to $428.9 billion). 19(b)(2), low reserve 8.1 institutions percent from (from In accordance with section Regulation D to increase the - 3- amount of the low reserve tranche for transaction accounts for 1986 by $1.9 million to $31.7 million. Section provides that depository reserve institution of liabilities of be the Board, that accordance to otherwise reserve requirement be a zero the the Act of each percent permits with designate if transaction would to 1 9 ( b ) (11)(A) to which this reserve However, liabilities^ subject Section in the Federal Reserve reservable shall institution, regulations those $2 million of requirement. depository apply. 1 9 ( b ) (11)(A) each rules reservable requirement exemption accounts subject and is are designated, to a three to only percent (i . e ., transaction accounts within the low reserve requirement tranche) may be so designated. Section provides that 1 9( b ) (11)(B) the Board December 31 of each year, of shall the Federal Reserve issue adjusting a regulation the total The change in the amount reservable institutions increases liabilities from one before for the next calendar year the dollar amount of reservable liabilities exempt requirements. Act held from reserve is to be made only at year to all if depository the next. Tfte percentage increase in the exemption is to be 80 percent of the percentage increase in total reservable liabilities of all i/ Reservable liabilities include transaction accounts, nonpersonal time deposits, and Eurocurrency liabilities as defined in section 19(b)(5) of the Federal Reserve Act. 4- - depository institutions The growth in total institutions 8.5 percent accordance from (from with determined reservable June 30, as of June liabilities section 1984, to June to $928.0 1 9 ( b ) (11), the each of all billion $855.5 30 30, year. depository 1985, was billion). Board is In amending Regulation D to increase the amount of the reserve requirement exemption for 1986 by $0.2 million to $2.6 million. As modify a the effective result, low the reserve January 1, requirement (effective effect tranche 1986) to (which a 1986) and this zero percent remaining after applying a amendments is $31.7 zero on the first $2.6 million of January 1, of these apply requirement on the remainder of excess of three to million, percent reserve transaction accounts percent the low reserve reserve is reserve tranche. requirement Any tranche it to transaction accounts will then be applied to nonpersonal time deposits with maturities of less than 1-1/2 years or to Eurocurrency liabilities, both of which are subject to a reserve requirement ratio of three percent. The tranche adjustment exemption adjustment effective beginning starting on and the reservable for weekly reporting with December 31, the reserve 1985, and institutions will be computation with the accounts, reservable liabilities. quarterly, the tranche and on January For adjustment 30, 1986, institutions and the period corresponding reserve maintenance periods beginning January 2, transaction liabilities 1986, for that exemption for net other report will be - 5- effective with the computation period beginning on December 17, 1985, and with January 16, the 1986. reserve In maintenance addition, all period beginning entities currently submitting Form FR 2900 will continue to submit reports to the Federal Reserve under current reporting procedures. In order institutions, level to reduce the (currently $25 million reporting decided to index in frequency. this percent of the annual reporting rate of quarter of for March of cutoff to determine 1985, level increase of small reporting cutoff "total deposits") In all depository institutions. second burden the Board established a deposit deposit the reporting the equal Board to 80 "total deposits" at Institutions are screened during each year to determine reporting frequency beginning the following September. All all Edge U.S. branches and Agreement and agencies Corporations, of foreign banks regardless of all other institutions with reservable liabilities the exemption level amount prescribed by section and size, and in excess of 1 9 ( b ) (11) the Federal Reserve Act and with at least $25 million m of "total deposits" are required to file weekly the Report of Transaction Accounts, Other Deposits and Vault Cash institutions exemption with level reservable amount but (FR 2900). liabilities with "total in funds branches or from non-U.S. international sources banking or excess deposits" $25 million may file the FR 2900 quarterly. obtain Depository that facilities of less the than Institutions have are that foreign required to 6- - file the Report of Certain Eurocurrency Transactions on the same frequency. (FR 2950) The reporting cutoff level is also used to determine whether an institution with reservable liabilities at or below the exemption level amount must file the Quarterly Report and of Selected Liabilities Deposits, (FR 2910q) nondeposit "other screening the Board deposits" liabilities." (indexed (which accounts, reporting has is annually) the and liabilities" (which affiliates, sum time is the ineligible of deposits) sum of acceptance that beginning be gross reservable the "total deposits" 1986, will of determined Thus, in the second quarter of $25 million savings (FR 2910a). level will be based on reservable Reservable Report of Total Deposits to ensure accurate liabilities, reporting cutoff Cash, or the Annual and Reservable Liabilities In order Vault with the cutoff measured plus "total reservable obligations liabilities, of deposits, "other reservable the level by transaction plus and of net Eurocurrency liabilities). Finally, institution cutoff to level, the report if the Board on may a weekly institution require basis, Similarly, depository regardless manipulates deposits and other reservable liabilities" for quarterly reporting. a its in order of the "total to qualify any depository institution that reports quarterly may be required to report weekly and to maintain appropriate reserve balances with its Reserve Bank during its computation period, it understates its usual if, - reservable liabilities or 7- it overstates the deductions allowed in computing required reserve balances. The provisions of 5 U.S.C. § 553(b) relating to notice and public participation have not been followed with the adoption of these amendments because in connection the amendments involve adjustments prescribed by statute and an interpretative statement reaffirming practices. the Board's Accordingly, the policy concerning Board believes that reporting notice and public participation is unnecessary and contrary to the public interest. List of Subjects in 12 CFR Part 204 Banks, banking; Currency? Federal Reserve System? Penalties and Reporting requirements. Effective December authority 12 U.S.C. under section 31, 19 of 1985, the pursuant Federal to the Reserve Board's Act, § 461 et s e g ., 12 CFR Part 204 is amended by revising paragraph (a) of section 204.9 to read as follows: SECTION 204.9 — (a)(1) Reserve RESERVE REQUIREMENT RATIOS p e r c e nt a ge s. The following ratios are prescribed for all depository institutions, Agreement Corporations, of foreign banks: reserve Edge and and United States branches and agencies Reserve reguirement Category Net transaction accounts $0 to $31.7 million 3 percent of amount over $31.7 million $951,000 plus 12% of amount over $31.7 million Nonpersonal time deposits By original maturity (or notice period): Less than 1-1/2 years 1-1/2 years or more 3% 0% Eurocurrency liabilities 3% (2) Exemption depository institution, from reserve requirements! Each Edge or Agreement Corporation, and U.S. branch or agency of a foreign bank is subject to a zero percent reserve requirement subject to nonpersonal the on an amount low reserve time deposits, of its tranche in transaction accounts paragraph or Eurocurrency (a)(1), liabilities or any combination thereof not in excess of $2.6 million determined in accordance with section 204.3(a)(3) of this Part. * By order Reserve System, of * the * * Board of * Governors of the Federal December 4, 1985. ( s igned ) W i l l i a m W. William W. Wiles Secretary of the Board Wiles