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FEDERAL RESERVE BANK OF NEW YORK [ Circular No. 10497 December 9, 1991 1 1992 RESERVE REQUIREM ENT ADJUSTM ENTS To All Depository Institutions, and Others Concerned, in the Second Federal Reserve District: T h e f o llo w in g sta te m e n t h a s b e e n is s u e d b y th e B o a r d o f G o v e r n o r s o f th e F e d e r a l R e s e r v e S y ste m : The Federal Reserve Board has announced an increase from $41.1 million to $42.2 million in the net transaction accounts to which a 3 percent reserve requirement will apply in 1992. The Board also changed from $3.4 million to $3.6 million the amount of reservable liabilities of each depository institution that is subject to a reserve requirement of zero percent. Additionally, the Board increased from $44.0 million to $44.8 million the deposit cutoff level that is used in con junction with the reservable liabilities exemption amount to determine the frequency of deposit reporting. E n c lo s e d — fo r d e p o s ito r y in stitu tio n s an d o th e r s m a in ta in in g s e ts o f B o a r d r e g u la tio n s — is a r e v is e d S u p p le m e n t to R e g u la tio n D , r e fle c tin g th e B o a r d ’s a c tio n . In a d d itio n , p r in te d o n th e fo llo w in g p a g e s is th e te x t o f th e B o a r d ’s o f f ic ia l n o tic e , w h ic h h a s b e e n r ep rin ted fr o m th e Federal Register o f N ovem ber 27. Q u e s tio n s re g a r d in g R e g u la tio n D m a y b e d ir e c te d to th e fo llo w in g : Maintenance Requirements: D o n a ld R . A n d e r s o n , M a n a g er, A c c o u n tin g D e p a r tm e n t (T el. N o. 2 1 2 - 7 2 0 - 5 2 5 0 ) A n th o n y F r e s s o la , C h ie f, A c c o u n tin g C o n tr o l D iv is io n (T el. N o. 2 1 2 - 7 2 0 - 5 8 0 3 ) Reporting Requirements: N a n c y B e r c o v ic i, A s s is ta n t V ic e P r e sid e n t (T el. N o. 2 1 2 - 7 2 0 - 8 2 2 7 ) K en n e th P L am ar, C h ie f, D e p o s it R e p o r ts D iv is io n (T el. N o. 2 1 2 - 7 2 0 - 8 5 9 0 ) Interpretation of Regulation D: J o y c e M . H a n s e n , C o u n s e l (T el. N o. 2 1 2 - 7 2 0 - 5 0 2 4 ) B ra d ley K . S a b e l, C o u n s e l (T el. N o. 2 1 2 - 7 2 0 - 5 0 4 1 ) E liz a b e th S. Ir w in -M c C a u g h e y , A s s is ta n t C h ie f E x a m in e r (T el. N o . 2 1 2 - 7 2 0 - 6 8 2 0 ) E. G erald C o r r ig a n , President. F E D E R A L R E S E R V E S Y S TE M 1 2 C F R Part 204 [Regulation D; Docket No. R-0741] Reserve Requirem ents of D epository Institutions; R eserve R equirem ent Ratios Board of Governors of the Federal Reserve System. A C T I O N : Final rule. AG EN CY: The Board is amending 12 CFR part 204 (Regulation D—Reserve Requirements of Depository Institutions) to increase the amount of transaction accounts subject to a reserve requirement ratio of three percent, as required by section 19(b)(2)(C) of the Federal Reserve Act (12 U.S.C. 461(b)(2)(C)), from $41.1 million to $42.2 million of net transaction accounts. This adjustment is known as the low reserve tranche adjustment. The Board has increased from $3.4 million to $3.6 million the amount of reservable liabilities of each depository institution that is subject to a reserve requirement of zero percent. This action is required by section 19(b)(ll)(B) of the Federal Reserve Act (12 U.S.C. 461(b)(ll)(B)), and the adjustment is known as the reservable liabilities exemption adjustment. The Board is also increasing from $44.0 million to $44.8 million the deposit cutoff level that is used in conjunction with the reservable liabilities exemption amount to determine the frequency of deposit reporting. d a t e s : E ffe c tiv e D a te: December 17, 1991. C o m p lia n c e D a te s: For depository institutions that report weekly, the low reserve tranche adjustment and the reservable liabilities exemption adjustment will be effective on the reserve computation period that begins Tuesday, December 24, 1991, and otn the corresponding reserve maintenance period that begins Thursday, December 26,1991. For institutions that report quarterly, the low reserve tranche adjustment and the reservable liabilities exemption adjustment will be effective on the reserve computation period that begins Tuesday, December 17,1991, and on the corresponding reserve maintenance period that begins Thursday, January 16,1992. For all depository institutions, the increase in the deposit cutoff level will be used to screen institutions in the second quarter of 1992 to determine the reporting frequency for the twelve month period that begins in September 1992. SUM M ARY: FO R FU R TH E R IN F O R M A T IO N C O N T A C T : Patrick J. McDivitt, Attorney (202/4523818), Legal Division, or June O'Brien, Economist (202/452-3790), Division of Monetary Affairs: for users of the Telecommunications Device for the Deaf (TDD), Dorothea Thompson (202/4523544); Board of Governors of the Federal Reserve System, Washington, DC 20551. S U P P L E M E N T A R Y i n f o r m a t i o n : Section 19(b)(2) of the Federal Reserve Act requires each depository institution to maintain reserves against its transaction accounis and nonpersonal time deposits, as prescribed by Board regulations. The initial reserve requirements imposed under section 19(b)(2) were set at three percent for total transaction accounts of $25 million or less and at 12 percent on total transaction accounts above $25 million for each depository institution. Section 19(b)(2) also provides that, before December 31 of each year, the Board shall issue a regulation adjusting for the next calendar year the total dollar amount of the transaction account tranche against which reserves must be maintained at a ratio of three percent. The adjustment in the tranche is to be 80 percent of the percentage change in total transaction accounts at all depository institutions over the one-year period that ends on the June 30 prior to the adjustment. Currently, the low reserve tranche on transaction accounts is $41.1 million. The increase in the total of net transaction accounts of all depository institutions from June 30,1990, to June 30,1991 was 3.3 percent (from $592.7 billion to $612.1 billion). In accordance with section 19(b)(2), the Board is amending Regulation D to increase the low reserve tranche for transaction accounts for 1992 by $1.1 million to $42.2 million. Section 19(b)(ll)(A) of the Federal Reserve Act provides that $2 million of reservable liabilities 1 of each depository institution shall be subject to a zero percent reserve requirement. Section 19(b)(ll)(A) permits each depository institution, in accordance with the rules and regulations of the Board, to designate the reservable liabilities to which this reserve requirement exemption is to apply. However, if transaction accounts are designated, only those that would otherwise be subject to a three percent reserve requirement (i.e., transaction accounts within the low reserve requirement tranche) may be so designated. 1 Reservable liabilities include transaction accounts, nonpersonal time deposits, and Eurocurrency liabilities as defined in section 19(b)(5) of the Federal Reserve Act. PRINTED IN NEW YORK, FROM F E D E R A L R E G IS T E R , 2 Section 19(b)(ll)(B) of the Federal Reserve Act provides that, before December 31 of each year, the Board shall issue a regulation adjusting for the next calendar year the dollar amount of reservable liabilities exempt from reserve requirements. Unlike the adjustment for transaction accounts, which adjustment can result in a decrease as well as an increase, the change in the exemption amount is to be made only if the total reservable liabilities held at all depository institutions increases from one year to the next. The percentage increase in the exemption is to be 80 percent of the increase in total reservable liabilities of all depository institutions as of the year ending June 30. Total reservable liabilities of all depository institutions from June 30,1990, to June 30,1991, increased by 6.0 percent (from $1,223.0 billion to $1,296.3 billion). Under section 19(b)(ll)(B), the reservable liabilities exemption amount will be increased by $0.2 million. Consequently, the reservable liabilities exemption amount for 1992 will increase to $3.6 million. The effect of the application of section 19(b) of the Federal Reserve Act to the change in the total net transaction accounts and the change in the total reservable liabilities from June 30,1990 to June 30,1991 is to increase the low reserve tranche to $42.2 million, to apply a zero percent reserve requirement on the first $3.6 million of transaction accounts, and to apply a three percent reserve requirement on the remainder of the low reserve tranche. The tranche adjustment and the reservable liabilities exemption adjustment for weekly reporting institutions will be effective on the reserve computation period beginning Tuesday, December 24,1991, and on the corresponding reserve maintenance period beginning Thursday, December 26,1991. For institutions that report quarterly, the tranche adjustment and the reservable liabilities exemption adjustment will be effective on the computation period beginning Tuesday, December 17,1991, and on the reserve maintenance period beginning Thursday, January 16,1992. In addition, all institutions currently submitting Form FR 2900 must continue to submit reports to the Federal Reserve under current reporting procedures. In order to reduce the reporting burden for small institutions, the Board has established a deposit reporting cutoff level to determine deposit reporting frequency. Institutions are screened during the second quarter of each year to determine reporting frequency beginning the following VOL. 56, NO. 229, pp. 60054-60056 S e p t e m b e r . In M a r c h o f 1 9 8 5 . t h e B o a r d i n d e x e d t h i s r e p o r t i n g c u t o f f l e v e l in a n a m o u n t e q u a l to 8 0 p e r c e n t o f th e a n n u a l r a t e o f i n c r e a s e o f t o t a l d e p o s i t s . 2 In J u ly o f 1 9 8 8 , i n c o n j u n c t i o n w i t h a p p ro v a l o f the e x t e n s io n o f the d e p o sit rep ortin g s y s t e m , th e B o a r d in c r e a s e d the cu to ff le v e l u p o n w h ic h the in d e x in g is to b e a p p l i e d to $ 4 0 m illio n . T h e c u rren t r e p o r tin g c u t o ff l e v e l is $44.0 m illion . F r o m June 30, 1990, to June 3 0 ,1 9 9 1 , t o t a l d e p o s i t s g r e w 2.1 p e r c e n t , f r o m $ 3 ,712.3 b illio n to $ 3 ,7 9 1 .9 b iilio n . T h is r e s u l t s in a n i n c r e a s e o f $ 0 . 8 m i l l i o n in the d e p o s i t c u t o ff l e v e l th at d e t e r m in e s th e f r e q u e n c y o f rep o rtin g from the cu rren t $ 4 4 .0 m illio n to $ 4 4 .8 m illio n . B a s e d o n the in d e x a tio n o f the r e se r v e req u irem en t e x e m p tio n , the c u to ff le v e l for to ta l d e p o s it s a b o v e w h i c h rep o rts o f d e p o s i t s m u s t b e f ile d w i l l r is e fr o m $3.4 m i l l i o n to $ 3 . 6 m i l l i o n . I n s t i t u t i o n s w i t h to ta l d e p o s i t s b e l o w $ 3 .6 m illio n a r e e x c u s e d fr o m r e p o r tin g if th e ir d e p o s i t s ca n b e e s tim a te d from o th e r d a ta s o u r c e s . T h e $44 .8 m illio n c u t o ff le v e l for w e e k l y v e r s u s q u a r te r ly FR 2900 r e p o r tin g a n d for q u a r te r ly FR 2910q v e r s u s a n n u a l FR 291 0 a rep ortin g, a n d the $3 .6 m illio n l e v e l t h r e s h o ld for r e p o r tin g w i l l b e u s e d in th e s e c o n d q u arter 1992 d e p o s it s rep ort sc r e e n in g p r o c e ss, a n d the a d ju stm e n ts w ill b e m a d e w h e n th e n e w d e p o s it rep ortin g p a n e l s a r e i m p l e m e n t e d in S e p t e m b e r 1992. A ll U .S . b r a n c h e s a n d a g e n c i e s o f fo r e ig n b a n k s a n d a ll E d g e a n d A g r e e m e n t C o rp o ra tio n s, r e g a r d le ss o f s iz e , are r e q u ir e d to file w e e k l y the R eport o f T r a n sa ctio n A c c o u n ts, O ther D e p o s i t s a n d V a u l t C a s h (F R 2 9 0 0 ] . A l l other in stitu tio n s that h a v e r e s e r v a b le lia b ilit ie s in e x c e s s o f th e e x e m p t i o n level p rescrib ed by sectio n 1 9 (b )(ll) o f the F ed era l R e s e r v e A c t (k n o w n a s ‘‘n o n e x e m p t i n s t i t u t i o n s ” ] a n d t o t a l d e p o s i t s at le a s t e q u a l to th e d e p o s it l e v e l ($44.8 m illio n ) a re a l s o r e q u ir e d to file w e e k l y th e R ep o rt o f T r a n s a c t io n A c c o u n ts , O th e r D e p o s its a n d V a u lt C a s h (F R 2 9 0 0 ) . H o w e v e r , n o n e x e m p t in stitu tio n s w ith total d e p o s its le s s than t h e d e p o s i t c u t o f f l e v e l ($44.8 m illio n ), m a y f i l e t h e FR 2 9 0 0 q u a r t e r l y f o r t h e t w e l v e m o n th p e r io d startin g S e p te m b e r 1992. I n s tit u tio n s th a t o b t a in fu n d s from n o n -U .S . s o u r c e s or th at h a v e fo reig n b r a n c h e s or in te r n a tio n a l b a n k in g f a c ilit ie s a r e r e q u ir e d to file th e R e p o r t o f C erta in E u ro curren cy T r a n s a c tio n s 2 In November of 1985. the Board amended the definition of “total deposits” as used in determining the cutoff level to include not only gross transaction deposits, savings accounts, and time deposits, but also reservable obligations of affiliates, ineligible acceptance liabilities, and net Eurocurrency liabilities. (F R 2 9 5 0 / 2 9 5 1 ) o n t h e s a m e f r e q u e n c y a s t h e y file th e FR 2900. In stitu tio n s w it h r e s e r v a b le lia b ilities a t o r b e l o w t h e e x e m p t i o n l e v e l ( $ 3 .6 m i l l i o n ) ( k n o w n a s ‘‘e x e m p t in s t i t u t i o n s ” ) m u s t file th e Q u a r t e r ly R eport o f S e le c t e d D e p o s its , V a u lt C ash, a n d R e s e r v a b l e L i a b i l i t i e s ( F R 291 Oq) if their to ta l d e p o s i t s ar e n o t b e l o w the d e p o s i t c u t o f f l e v e l ($ 4 4 .8 m illio n ) . E x e m p t in stitu tio n s w ith total d e p o sits le s s than the d e p o s it c u to ff le v e l but m ore than the e x e m p tio n a m o u n t m ust file th e A n n u a l R e p o r t o f T o t a l D e p o s it s a n d R e s e r v a b l e L i a b i l i t i e s (F R 2 9 1 0 a ) . In stitu tio n s th at h a v e total d e p o s it s le s s t h a n t h e e x e m p t i o n a m o u n t ($3.6 m illio n ) a r e n o t r e q u ir e d to file d e p o s i t r e p o r ts if th e ir d e p o s i t s c a n b e e s tim a te d from o ther d a ta so u r c e s. ce r tifie s that the p r o p o s e d a m e n d m e n t s w ill not h a v e a sig n ifica n t e c o n o m ic im p a c t on a su b s ta n tia l n u m b e r o f sm a ll en tities. T h e p r o p o sed a m e n d m e n ts r e d u c e c e r t a in r e g u la t o r y b u r d e n s for all d e p o s it o r y in stitu tio n s, r e d u c e certa in b u r d e n s for s m a ll d e p o s it o r y in stitu tio n s, a n d h a v e n o p a rticu la r effect on other sm all en titie s,. Finally, the Board may require a depository institution to report on a weekly basis, regardless of the cutoff level, if the institution manipulates its total deposits and other reservable liabilities in order to qualify for quarterly reporting. Similarly, any depository institution that reports quarterly may be required to report weekly and to maintain appropriate reserve balances with its Reserve Bank if, during its computation period, it understates its usual reservable liabilities or it overstates the deductions allowed in computing required reserve balances. PART 204— RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS Notice and Public Participation T h e p r o v i s i o n s o f 5 U .S .C . 553(b) r e l a t i n g to n o t i c e a n d p u b l i c p a r t i c i p a t i o n h a v e n o t b e e n f o l l o w e d in c o n n e c tio n w ith the a d o p tio n o f th e se a m e n d m e n ts b e c a u s e the a m e n d m e n ts in v o lv e a d ju stm en ts p rescrib ed by sta tu te a n d b y a n in te rp reta tiv e s t a t e m e n t rea ffir m in g th e B o a r d 's p o lic y c o n c e r n in g reporting p r a c tic e s. T h e a m e n d m e n ts a ls o r e d u c e regu latory b u rd en s o n d e p o sito r y in stitu tion s. A c c o r d in g ly , the B oard fin d s g o o d c a u s e for d e te r m in in g , a n d s o d e t e r m in e s , that n o tic e a n d p u b lic p a rticip a tio n are u n n e c e s s a r y a n d c o n tra ry to the p u b lic in terest. T h e p r o v is io n s o f 5 U .S .C . 553(d) r e la tin g to n o t i c e o f th e e f f e c t i v e d a t e o f a r u l e h a v e n o t b e e n f o l l o w e d in c o n n e c tio n w ith the a d o p tio n o f these a m en d m en ts b e c a u s e the a m en d m en ts r e lie v e a restr ic tio n o n d e p o s it o r y i n s t i t u t i o n s , a n d f o r t h i s r e a s o n t h e r e is g o o d c a u s e to d e t e r m in e , a n d the B o a r d s o d e t e r m in e s , that s u c h n o tic e is n o t necessary. Regulatory Flexibility Act Analysis Pursuant to section 6 0 5 ( b ) of the Regulatory Flexibility Act (Pub. L. No. 9 6 - 3 5 4 , 5 U . S . C . 6 0 1 et seq .), the Board 3 L is t o f S u b j e c t s in 1 2 C F R P a r t 2 0 4 B a n k s, b a n k in g , C u rren cy, F ed era l R e s e r v e S y ste m , M o rtg a g es, P en a lties. R ep o rtin g a n d record k e e p in g req u irem en ts. P u r s u a n t to th e B o a r d 's a u th o r ity u n d er s e c tio n 19 o f the F e d e r a l R e s e r v e A c t , 12 U . S . C . 4 6 1 ct seq., t h e B o a r d i s a m e n d i n g 12 C F R P a r t 2 0 4 a s f o l l o w s : 1. T h e a u t h o r i t y c i t a t i o n fo r p a r t 2 0 4 c o n t i n u e s to r e a d a s f o llo w s : Authority: S ectio n s 11(a), 11(c). 19, 25, 25(a) of the F ed eral R e serv e A ct (12 U.S.C. 248(a), 248(c ). 371a, 371b, 461, 601, 611); se ctio n 7 of the In te rn a tio n a l B anking A ct of 1978 (12 U.S.C. 3105); a n d se ctio n 411 of the G arn StG erm ain D ep o sito ry In stitu tio n s A ct of 1982 (12 U.S.C. 461). 2. In § 2 0 4 . 9 p a r a g r a p h s ( a ) ( 1 ) a n d (a)(2) a r e r e v i s e d to r e a d a s f o llo w s : § 204.9 Reserve requirement ratios. (a)(1) R e s e r v e p e r c e n t a g e s . T h e fo llo w in g r e s e r v e ra tio s are p rescrib ed for all d e p o s it o r y in stitu tio n s. E d g e a n d A g r e e m e n t C orp oration s, an d U n ite d S t a t e s b r a n c h e s a n d a g e n c i e s o f foreign banks: Category Reserve requirement Net transaction accounts:1 SO to $42.2 million....... 3 percent of amount. Over $42.2 million......... S1,266,000 plus 12 oercent of amount over $42.2 million. 0 percent. Nonpersonal time deposits. Eurocurrency liabilities...... 0 percent. 1 Dollar amounts do not reflect the adjustment to be made by the next paragraph. (2) E x e m p t i o n f r o m r e s e r v e req u irem en ts. E ach d e p o sito r y in stitu tio n . E d g e or a g r e e m e n t c o r p o r a t io n , a n d U .S. b r a n c h or a g e n c y o f a f o r e ig n b a n k is s u b j e c t to a z e r o p e r c e n t rese r v e req u irem en t on an a m o u n t o f its t r a n s a c t io n a c c o u n t s s u b j e c t t o t h e l o w r e s e r v e t r a n c h e in p a r a g r a p h ( a ) ( 1 ) o f t h i s s e c t i o n n o t in e x c e s s o f $ 3 . 6 m i l l i o n d e t e r m i n e d in a c c o r d a n c e w it h § 2 0 4 .3 (a )(3 ) o f this part. By order of the Board of Governors of the Federal Reserve System, November 21,1991. William W. Wiles, Secretary of the Board. jFR Doc. 91-28441 Filed 11-26-91; 8:45 am] BILLING CODE 6210-01-M BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM SUPPLEM ENT TO REGULATION D Reserve Requirement Ratios Effective December 17, 1991, pursuant to the Board’s authority under section 19 of the Federal Reserve Act, 12 U.S.C. §§ 461 et seq., 12 CFR Part 204 is amended by revising paragraphs (a) (1) and (2) of section 204.9 to read as follows: SECTION 204.9 — RESERVE REQUIREMENT RATIOS (a)(1) Reserve percentages. The following reserve ratios are pre scribed for all depository institutions, Edge and Agreement Corpora tions, and United States branches and agencies of foreign banks: CATEGORY RESERVE REQUIREMENT Net transaction accounts* $0 to $42.2 m illio n ..............................3% of amount Over $42.2 m illio n .............................. $1,266,000 plus 12% of amount over $42.2 million Nonpersonal time deposits ................ 0% Eurocurrency liabilities .....................0% (2) Exemption from reserve requirements. Each depository institu tion, Edge or Agreement Corporation, and U.S. branch or agency of a foreign bank is subject to a zero percent reserve requirement on an amount o f its transaction accounts subject to the low reserve tranche in paragraph (a)(1) of this section not in excess of $3.6 million determined in accordance with section 204.3(a)(3) of this part. * Dollar amounts do not reflect the adjustment to be made by the next paragraph. [Enc. Cir. No. 10497]
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