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CEO Day scheduled for Aug. 9
All-day program
for chief executives

The Bank is planning an allday program August 9 in St. Louis
for the chief executive officers of
member banks in the Little Rock,
Louisville and Memphis zones.
The program will focus on several

topics of current interest in the
banking industry.
Almost 150 chief executive
officers attended the Bank's CEO
Day held last August for member
bankers in the St. Louis zone.

Automatic transfer: how it will work
Banks may begin
offering service Nov. 1

The Board of Governors
has amended Regulation Q to
permit banks to offer individual
customers the option of arranging for the automatic transfer of
funds from their savings to their
checking accounts.
Member banks may offer
the new service beginning November 1. Automatic transfer ser-

vice may not be offered to business and corporate customers or
to governmental units.
Automatic transfers may be
made to cover checks and prevent
overdrafts or to maintain a minimum balance in checking accounts. Arrangements for automatic transfers must be made in
advance by the customer.

No penalty required
for transfers

Initially, banks will not be
required to impose a penalty for
automatic transfers. However, developments in the financial services market relating to this provision will be carefully monitored
by the Board and the provision
will be reconsidered no later than
November 1, 1979, one year after
the effective date of the amendment.
The amendment does not
affect existing arrangements be-

tween thrift institutions and
member banks for the automatic
transfer of funds from thrift institutions to checking accounts
in commercial banks.
The Board has had the
amendment to Regulation Q under consideration since it was first
proposed in March 1976. The
proposal was revised and issued
for further comment in February
of this year.

Thirty days' notice

Banks that choose to offer
automatic funds transfer service
are required to call to the attention of depositors the fact that-

as in the past-they reserve the
right to require 30 days' notice
of withdrawals from savings accounts.
Federal Reserve Bank of St. Louis

New time certificates permitted
Higher permissible
interest rates

Banks may
now offer
customers two new time cer-

tificates at interest rates higher
than rates permitted in the past.

Money market

The ceiling rate on one of
the new instruments, a nonnegotiable short-term money market
certificate, will equal the average
yield on six-month Treasury bills
issued in the Treasury's most recent weekly auction. The money
market certificates must be issued
in minimum denominations of
$10,000 with a six-month ma-

Treasury bills are normally
auctioned on Monday and issued
on Thursday. The ceiling rate at
which new money market certificates may be issued will be adjusted each week effective on the
day the new six-month Treasury
bills are issued.


The other new instrument is
an eight-year certificate with a
fixed maxim um rate of interest
of 7-3/4 percent. The eight-year
certificates may be issued in minimum denominations of $1,000.
The new instruments were
created by joint action of the
Federal Home Loan Bank Board,
the FDIC and the Federal Reserve Board. Ceiling rates savings
and loan associations may pay on
the instruments are a quarter of a
percent higher than those banks
may pay. The three bodies also
moved the maximum rate that
may be paid on new deposits of
governmental units and on IRA

and Keogh Accounts with three
year maturity to 8 percent, the
highest rate a federally insured
bank or savings and loan may
pay on time deposits with maturities of more than six months.
Rates on existing governmental,
IRA and Keogh accounts may
not be increased until the accounts mature.
Both the money market certificates and the new long-term
certificates are subject to existing
penalties for early withdrawal.
No change was made in maximum permissible rates on other
types of time deposits.

Pamphlet on regulations available
Contains simplified
Federal Reserve Bank of St. Louis

A Guide to Federal Reserve
Regulations, a pamphlet containing brief, simplified explanations
of Federal Reserve Board regulations, has been published by
the Board of Governors.
The more than two dozen

Board regulations deal with commercial banks, bank holding companies, consumer credit transactions, interest on savings deposits, the clearance and settlement of checks and other payments involving the use of Fed-

























eral Reserve facilities.
Copies of the booklet may
be obtained singly or in bulk,
without charge, from the Public

Information Department, Federal Reserve Bank of St. Louis,
P. 0. Box 442, St. Louis, Mo.

Ninth digit coming soon
July 1 date for
routing number change

A change in the routing number on checks-the addition of a
ninth digit-is scheduled to go into effect July l .
Prior to that date, commercial banks, check processing centers, and check processing equipment manufacturers should make

changes in computer programs and
equipment to enable items bearing the nine-digit routing number
to be read. Check printers should
also arrange to have the magnetic
ink characters printed in the
routing/transit field on all checks
printed after July 1, 1978.

Will reduce
exception items

The ninth digit, called the
"check digit," for each banks is
derived from the other eight digits
in the bank's routing number.
Thus, the additional digit will enable banks and check processing
centers with automated processing

equipment to regenerate any
other digit in the routing series
that may be indistinguishable,
which will reduce check processing exception items and processing costs.

Eight-digit checks
may be used up

The "check digit" for each
bank appears in all editions of
Rand McNally's Key to Routing
Numbers dated 1975 or later,
printed in parentheses after the
traditional eight-digit number for
the bank. And, it is the same digit
a bank currently uses, along with
its eight-digit routing number,
when transferring funds and securities through the Federal Reserve Communications System.
Banks should instruct check
printers to print the new ninedigit routing number on all checks
ordered for use after July 1 . In

addition, banks and processing
centers using reader/sorters must
make programming changes and,
in some instances, minor equipment changes to enable them to
process both the new nine-digit
checks and the old style, eightdigit items.
Existing inventories of checks
with the eight-digit format may
be used after July 1, but checks
with the nine-digit format may
not be used before that date. No
change need be made in the fractional symbol that appears in the
11pper right-hand comer of checks.

Devel oped by

Plans to add a ninth digit to
the routing number were developed by the American Bankers
Association and the Federal Reserve System and were announced

in August 1977. Late last year,
all financial institutions were
urged to begin preparations for
the July 1 changeover to the new
routing number format.

Federal Reserve Bank of St. Louis

P. 0. BOX 442


The Fed Letter is published by the Federal Reserve Bank of
St. Louis to help Eighth Felleral Reserve District bankers keep
informed on topics of importance to the banking industry.
The Federal Reserve B~nk of St. Louis is solely responsible
for the contents of this publication. The publication does not
necessarily represent the official or unofficial views of the Board
of Governors of the Federal Reserve System.

TT&L rate, amendments, effective date
Program becomes
effective July 6

The Treasury has set July 6
as the effective date for its new
Treasury Tax and Loan Invest-

ment Program. The program was
discussed in the March-April issue
of the Fed Letter.

D and Q amendments
facilitate participation

The Board of Governors of
the Federal Reserve System recently amended two of its regulations to facilitate participation
of member banks in the new TT
&L program. Regulation D was
amended so that funds in TT&L
note accounts will not be re-

garded as deposits subject to reserve requirements, and Regulation Q was amended so that the
note accounts will not be subject to rules relating to interest
on time and savings deposits. The
amendments become effective
July 6.

Interest charge based
on Fed Funds rate

The interest rate banks will
be charged for using funds acquired through the program will
be a quarter of a percent below

the prevailing Fed Funds rate.
The Treasury had previously considered charging the prevailing
rate on repurchase agreements.
Federal Reserve Bank of St. Louis