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F ederal Reserve Bank DALLAS, TEXAS of Dallas 75222 Circular No. Jk-2h8 September 11, 197^ SUPPLEMENT TO REGULATION D To All Member Banks in the Eleventh Federal Reserve District: Reference is made to Circular No. 7h-2h3 dated September 6, 197^ regarding the announcement by the Board of Governors of the Federal Reserve System of an amendment to Regulation D removing the marginal reserve require ments on large denomination time deposits and related domestic instruments with a maturity of four months or longer. In summary, effective for the reserve computation week beginning September 5, (with reserves maintained during the week beginning September 19), this amendment will provide for the removal of the 3 per cent marginal reserve requirement on large denomination time deposits and related domestic instruments with an initial maturity of four months (120 days) or longer. This amendment does not apply to deposits of these types totaling less than $10 million. The revised Supplement to Regulation D reflecting these decreases is attached. This new Supplement effective September 5, 197^ should be substituted for the Supplement (effective December 13, 1973) now filed with your copy of Regulation D. Yours very truly, P. E. Coldwell President Attachment This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM SUPPLEMENT TO REGULATION D A s am ended effective Septem ber 5 ,1 9 7 4 SECTION 204.5 — RESERVE REQUIREMENTS (a) R eserve percentages. Pursuant to the provi sions of section 19 of the Federal Reserve Act and § 204.2(a) and subject to paragraph (c) of this section, the Board of Governors of the Federal Reserve System hereby prescribes the following reserve balances that each member bank of the Federal Reserve System is required to maintain on deposit with the Federal Reserve Bank of its district: (1) If no t in a reserve city— (i) 3 per cent of (A ) its savings deposits and (B) its time deposits, open account, that constitute deposits of individuals, such as Christmas club ac counts and vacation club accounts, that are made under written contracts providing that no with drawal shall be made until a certain number of periodic deposits have been made during a period of not less than 3 months; and (ii) 3 per cent of its other time deposits up to $5 million, plus 5 per cent of such deposits in excess of $5 million: Provided, however, That a member bank shall maintain a reserve balance equal to 8 per cent of the amount by which the daily average amount of time deposits and such other obligations of the types hereinafter specified exceeds either the daily average amount of such obligations outstanding during the computation period ending May 16, 1973, or $10 million, whichever is greater, and such 8 per cent reserve percentage shall apply only with respect to the following types of obligations which on September 5, 1974, have a remaining maturity of less than 120 days or which are issued on or after that date with initial maturities of less than 120 days: (a) time deposits of $100,000 or more; and (b) time deposits represented by promissory notes; acknowledgments of advance, due bills, or similar obligations issued by a member bank’s affiliate, as provided in § 204.1(f); and (c) time deposits represented by bank ac ceptances, as provided in § 204.1(f); and Provided further, that in no event shall the reserves required on its aggregate amount of time and savings deposits exceed 10 per cent; and (iii) (a) 8 per cent of its net demand deposits if its aggregate net demand deposits are $2 million or less, (b) $160,000 plus IOV2 per cent of its net demand deposits in excess of $2 million if its aggregate net demand deposits are in excess of $2 million but less than $10 million, (c) $1,000,000 plus HV 2 per cent of its net demand deposits in excess of $10 million if its aggregate net demand deposits are in excess of $10 million but less than $100 million, or (d) $12,250,000 plus 13V4 per cent of its net demand deposits in excess of $100 million. (2) If in a reserve city (except as to any bank located in such a city that is permitted by the Board of Governors of the Federal Reserve Sys tem, pursuant to § 204.2(a) (2 ), to maintain the reserve specified in subparagraph (1) of this paragraph) — (i) 3 per cent of (A ) its savings deposits and (B) its time deposits, open account, that constitute deposits of individuals, such as Christmas club accounts and vacation club accounts, that are made under written contracts providing that no withdrawal shall be made until a certain number of periodic deposits have been made during a period of not less than 3 months; and (ii) 3 per cent of its other time deposits up to $5 million, plus 5 per cent of such deposits in excess of $5 million: Provided, however, That a member bank shall maintain a reserve balance equal to 8 per cent of the amount by which the daily average amount of time deposits and such other obligations of the types hereinafter specified exceeds either the daily average amount of such obligations outstanding during the computation period ending May 16, 1973, or $10 million, whichever is greater, and such 8 per cent reserve percentage shall apply only with respect to the following types of obligations which on September 5, 1974, have a remaining maturity of less than 120 days or which are issued on or after that date with initial maturities of less than 120 days: (a) time deposits of $100,000 or more; and (b) time deposits represented by promissory notes; acknowledgments of advance, due bills, or similar obligations issued by a member bank’s affiliate, as provided in § 204.1(f); and and during each successive four-week ( “main tenance” ) period, a member bank shall maintain with the Reserve Bank of its district a daily aver age balance equal to 8 per cent of the daily aver age amount of such deposits during the four-week computation period ending on the Wednesday fifteen days before the beginning of the main tenance period. An excess or deficiency in reserves in any week of a maintenance period under this paragraph shall be subject to § 204.3(a) (3 ), as if computed under § 2 0 4 .3 (a )(2 ), and deficiencies u n d e r this p a ra g ra p h shall be subjected to § 2 0 4 .3 (b ):9 Provided, That any bank that, under the terms of § 204.5(c) of Regulation D as in effect prior to June 21, 1973,10 was deducting for the com Provided further, that in no event shall the putation period ending on May 9, 1973, an earlier reserves required on its aggregate amount of time period’s corresponding daily average total of such and savings deposits exceed 10 per cent; and deposits (hereinafter called “reserve-free base” ) (iii) $52,750,000 plus 18 per cent of its net in calculating its reserve requirements shall con tinue to be entitled to do so in accordance with demand deposits in excess of $400 million. the terms of such former section, but such reserve(b) C urrency and coin. The amount of a mem free base shall not exceed progressively lower ceil ings established hereunder by reducing the amount ber bank’s currency and coin shall be counted as of its reserve-free base for the computation period reserves in determining compliance with the re ending on May 9, 1973, in ten increments, each serve requirements of paragraph (a) of this section. equal to 10 per cent of its base in such computa (c) Reserve percentages against certain deposits tion period ending on May 9, 1973, applied con by foreign banking offices. Deposits represented secutively in each succeeding computation period by promissory notes, acknowledgments of ad beginning with the period ending on August 1, vance, due bills, or similar obligations described 1973, until such reserve-free base is exhausted. in § 204.1(f) to foreign offices of other banks,8 or to institutions the time deposits of which are exempt from the rate limitations of Regulation Q 8A n y bank ing office located ou tside the States o f the U n ited States and the D istrict o f C olu m b ia o f a bank organ ized under pursuant to § 217.3(g) thereof, shall not be sub d om estic or foreign law. ject to p a ra g ra p h (a) of this section or to 0T h e term “ com p u tation p eriod ” in § 2 0 4 .3 ( a ) ( 3 ) and ( b ) shall, for th is purpose, be deem ed to refer to ea c h w eek § 20 4 .3 (a)(1 ) and (2 ); but during each week of o f a m ain ten an ce period under this paragraph. the four-week period beginning June 21, 1973, 1035 F ederal R egister 18658. (c) time deposits represented by bank ac ceptances, as provided in § 204.1(f); and
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