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F E D E R A L R E S E R V E BANK OF NEW YORK J" Circular N o. 5 4 3 4 "I L December 26, 1963 J . Deposits of Business Corporations Not Classifiable As “ Savings Deposits” Under Regulations Q and D To the Member Banks o f the Second Federal Reserve D istrict: The following statement was made public today by the Board of Governors of the Federal Reserve System: The Board o Governors la r c i e i q i i s regarding an i t r r t t o i s e by t e Comp f is e e v d n u r e nepeain sud h t o l r o t e Currency under d t o December 1 , 1 6 , t t e e f c t a “a n t o a bank may ... rle f h ae f 9 9 3 o h fet h t ainl ac e t s v gsaccounts without regard t whether t e funds d p s t d a e t t e c e i o one or more c p a in o h e o i e r o h rdt f i d v d a s o o a c r o a i n a s c a i n o other o g n z t o , whether operated f r p o i o niiul r f o p r t o , soito, r raiain o rft r ohrie ’ tews. ’ As members o t e Federal Reserve System, n t o a banks a e s b e t t t e p o i i n o s c i n f h ainl r u j c o h rvs o s f eto 1 o t e Federal Reserve Act which p o i i member banks from paying i t r s , d r c l o i d 9 f h rhbt neet i e t y r n i r c l , on any demand d p s t and which r q i e th Board o Governors t l m t t e r t o i t r s ety eoi eur e f o ii h ae f neet t a may be paid by such banks on time and sa i g d p s t . To t i e d i i n c ht v n s eois h s n , t s e essary t d f n t e o eie h terms “demand d p s t ” and “sa i g d sits”; and t e law e p e s y a t o i e t e Board o eois v n s epo h xrsl uhrzs h f Governors t d f n such terms and t p e c i e r g l t o s t e f c u t t e purposes o t e s a u e o eie o r s r b e u a i n o fetae h f h ttt and prevent e a i n . vsos The Board’ Regulation Q d f n s a “s v s eie a ings deposit” i a manner t a permits such d p s t n ht eois t be made only by i d v d a s o by c r o a i n , a s c a i n , and other o g n z t o s which a e n t o niiul r o p r t o s soitos raiain r o operated f r p o i but f r r l g o s p i a t r p c c a i a l , e u a i n l f a e n l o s m l r pur o rft o eiiu, h l n h o i , hr t b e d c t o a , r t r a , r i i a p s s This d f n t o has been i e f c s n e 1 3 . oe. eiiin n fet i c 9 6 Accordingly, a d p s t by a c eoi orporat operated f r p o i may not b c a s f e by any member ion o rft e lsiid bank, i ncluding a n t o a bank, a a s v n s d p s t Unless such a d p s t comes within t e d f n ainl s a i g eoi. eoi h eii t o o a “time deposit” i would c n t t t a demand d p s t under Regulation Q and payment o in f t osiue eoi f i t r s on such d p s t by a n t o a bank would v o a e t e p o i i i n o t e law a a n t payment neet eoi ainl ilt h r h b t o f h gis o i t r s on demand d p s t . f neet eois Failure o a n t o a bank t comply with p o i i n o t e Federal Reserve Act c n t t t s f ainl o rvsos f h osiue grounds f r i s i u i g l g l proceedings t c o e t e bank. The law a s provides t a any d r c o o ntttn ea o ls h lo ht ietr o a n t o a bank p r i i a i g i o a s n i g t a v o a i n s a l be p r o a l l a l f r any f ainl atcptn n r setn o i lto hl e s n l y ibe o damages t a may be sustaine by t e bank, is s a e o d r , o any o h r persons i consequence o ht d h t hrhles r te n f t e voain h ilto. In a d t o , Federal Reserve Regulation D, r l t n t r s r e required t be maintained by diin eaig o eevs o member banks i t e Federal Reserve System, c n a n a d f n t o o s v n h o t i s e i i i n f a ings d p s t i e t c l t t a eois dnia o ht o Regulation Q No d p s t o a b s n s c r oration i a member bank may be c a s f e a a sav f . eoi f uies op n lsiid s i g d p s t f r r s r e purposes a u l s i f l swithin t e d f n t o o a time d p s t a n t o a ns eoi o eev nd, n e s t a l h eiiin f eoi, a i n l bank must maintain a a n t such a d p s t t e r s r e a p i a l t demand d p s t ( /2 per c n gis eoi h eevs plcbe o e o i s 161 et f r r s r e c t banks and 12 per c n f r o h r member banks), r t e than t o e a p i a l t time o e e v iy et o te ahr hs plcbe o and s v a ings d p s t ( per c n f r al member banks). C a s f c t o o such a d p s t a a s v n s eois 4 et o l lsiiain f eoi s aig d p s t would v o a e Regulation D and s b e t t e member bank t a penalty f r any r s l i g eoi ilt ujc h o o eutn r s r e dfcec. e e v eiiny A lfred H ayes, President.
@FedFRASER