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F E D E R A L R E S E R V E BANK O F N EW YORK r Circular N o. 4 7 6 7 * 1 L A ugust 4, 1959 J New Law on Member Bank Reserve Requirements To A ll Banks, and Others Concerned, in th e Second Federal R eserve D istrict : On J u ly 28, 1959, the President o f the U nited States signed into law an act (P u blic Law No. 86-114) amending certain provisions o f the F ederal R eserve A ct and the National Bank A ct relating to reserves required to be m aintained by member banks. W hile the act makes no immediate change in the method o f com puting reserves or in current actual reserve requirements, it authorizes the B oa rd o f G overnors o f the F ederal R eserve System to perm it member banks, under such regulations as it may prescribe, to count all or part o f their currency and coin as reserves. M em ber banks w ill be notified prom ptly o f any regulation the B oa rd o f G overnors m ay adopt perm itting such currency and coin to be counted as reserves. The new law also— (a ) Establishes a maximum reserve requirement fo r reserve city and central reserve city member banks o f 22 per cent (previously 20 and 26 per cent, respectively) and a minimum reserve requirement fo r central reserve city member banks o f 10 per cent (previously 13 per cen t). (b ) Changes the basis upon which the B oard o f Governors may perm it (i) member banks located in reserve cities to maintain reserves required o f country member banks, and (ii) mem ber banks located in central reserve cities to maintain reserves required o f reserve city or country member banks. This permission may now be granted on such basis as the B oard may deem rea sonable and appropriate in view o f the character o f business transacted by the member bank. The act eliminates the provisions that, to be eligible fo r such permission, the member bank must be located in the outlying districts o f its city or in territory added to the city by the extension o f the c ity ’s corporate charter. (e) Effective three years from its enactment, terminates the “ central reserve c ity ” classifi cation and reclassifies New Y ork and Chicago as reserve cities. (d ) Requires only one o f several holding com pany affiliates owning or controlling the stock of the same bank or group o f banks to maintain reserves o f readily marketable assets with respect to the bank stocks they own or control. A dditional copies o f this circular w ill be furnished upon request. A l f r e d H a y e s , P r esid en t.
@FedFRASER