Full text of District Notices (Federal Reserve Bank of Dallas) : Regulation D -- Reserve Requirements of Depository Institutions, Circular No. 85-157

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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.
ATTACHMENTS
Board's press r e l e a s e and the r e l a t e d Federal Re gister document.
MORE INFORMATION
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,

$855.5

section

as

of

June

liabilities
to

June

billion

to

$928.0
the

each

of all

1984,

1 9 ( b ) (11),

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,

ineligible

sum

time

is

the

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