Full text of District Notices (Federal Reserve Bank of Dallas) : Reserves Required to Be Maintained by Member Banks With Federal Reserve Banks

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

F ederal Reser ve Bank
OF DALLAS

Dallas, Texas, June 21, 1954

RESERVES REQUIRED TO BE MAINTAINED BY MEMBER
BANKS WITH FEDERAL RESERVE BANKS

To the Member Banks o f the
Eleventh Federal Reserve District:

The Board of Governors o f the Federal Reserve System has today announced the adoption of a
supplement to Regulation D, which has the effect o f reducing reserve requirements o f member banks.
Copy o f the supplement is enclosed.
The following press statement was released by the Board today in regard to its action in reducing
reserve requirements:
“ The Board o f Governors has reduced the reserves required to be maintained by member
banks o f the Federal Reserve System. The reduction will become effective on a gradual basis
over the next six weeks.
“ The action will release from reserves more than $1.5 billion, which will then be available
to the 6,700 member banks for expanding loans and investments as the economy enters a
season o f rising credit needs.
“ Each member bank is required to maintain in the reserve bank o f its district an amount
of reserve funds equal to a specified percentage o f the demand deposits (checking accounts)
and time deposits (savings accounts) outstanding on the member bank’s books.
“ When the reductions have been completed on August 1, the percentages applicable will
have been lowered as follow s:
“ On net demand deposits— For central reserve city banks, from 22 to 20 per cent; for
reserve city banks, from 19 to 18 per cent; for country banks, from 13 to 12 per cent. The
amount o f reserves that will be released is estimated at $1,180,000,000.
“ On time deposits— For all member banks, from 6 to 5 per cent. The amount of reserves
to be released is estimated at $375,000,000.
“ The reductions will become effective according to the following schedule:
O N N E T D E M A N D D EPO SITS

June 24
July 29
July 29
August 1

Percentage

For

Effective

Central reserve city b a n k s ...............................................
Central reserve city b a n k s ...............................................
Reserve city banks
..........................................................
Country b a n k s ....................................................................

From
From
From
From

22
21
19
13

to
to
to
to

21
20
18
12

per
per
per
per

cent
cent
cent
cent

ON T IM E D E P O SIT S
Effective

June 16*
June 24

For

Percentage

Country b a n k s ...........................................................................From 6 to 5 per cent
Central reserve and reserve city b a n k s ............................From 6 to 5 per cent

*Retroactive, so as to apply to the average balance in each country bank’s account with its reserve bank for the
period June 16 through June 30.

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

“ This action was taken in conformity with the Federal Reserve System’s policy o f making
available the reserve funds required for the essential needs o f the economy and of facilitating
economic growth. The reduction will release a total of approximately $1,555,000,000 of reserves.
It was made in anticipation of estimated demands on bank reserves during the summer and
fall, taking account o f probable private financing requirements, including the marketing o f
crops and replenishment o f retail stocks in advance of the fall and Christmas sale seasons,
as well as the Treasury’s financing needs.
“ The Board is authorized by law to fix reserve requirements within the following limits:
Net demand deposits, for central reserve city banks, 13 to 26 per cent; for reserve city banks,
10 to 20 per cent; fo r country banks, 7 to 14 per cent; on time deposits, for all member banks,
3 to 6 per cent.
“ The last previous reduction in reserve requirements was announced on June 24, 1953.
Changes in reserve requirements supply or withdraw relatively large amounts of bank reserves,
even when effected on a gradual basis, as in the present action. Accordingly, such changes are
comparatively infrequent. For more flexible and frequent adjustments to the credit needs o f
the economy the System relies chiefly upon open market operations to release or absorb reserve
funds.”
The supplement to Regulation D should be filed in the ring binder containing current bulletins of
this bank and the regulations of the Board of Governors o f the Federal Reserve System. Please
acknowledge receipt on the enclosed post card.
Yours very truly,
WATROUS H. IRONS
President