Full text of Federal Reserve Bank of New York Circulars : 6709. Amendment to Regulation M

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F ederal R eserve Bank
of

N e w Yo rk

Circular No. 6 7 0 9 ~1
April 2, 1971
J

[
AMENDMENT TO REGULATION M
Reserves Against Eurodollar Borrowings

To the M em ber Banks of the Second Federal Reserve District:

F ollow in g is the text o f a statement issued yesterday by the B oard o f G overnors o f
the F ederal R eserve S ystem :
The Board of Governors of the Federal Reserve System today amended its regulation to permit
U. S. banks to count toward maintenance of their reserve-free Eurodollar bases any funds invested
by their overseas branches in U. S. Treasury securities offered under the program announced today
by the Treasury. The Board had previously made a similar amendment regarding Export-Import
Bank securities offered to foreign branches.
Eurodollar borrowings by a member bank are subject to a 20 per cent reserve requirement to
the extent that they exceed a bank’s reserve-free base. Foreign branches of U. S. banks may, how­
ever, purchase and hold free of reserve requirements securities issued under this Treasury program,
as they have heretofore been able to do under the similar Export-Import Bank program, even if the
branch security holdings — together with head office borrowings of Eurodollars from their branches
— exceed the reserve-free base.

E nclosed is a cop y o f an amendment, effective A p r il 1, 1971, to Regulation M,
“ F oreig n A ctivities o f N ational B anks,” giving effect to the above change. Additional
copies o f the enclosure w ill be furnished upon request.




A

lfred

H

ayes,

President.




B oard

of

G overnors

of th e

F e d e r a l R e s e r v e Sy s t e m

FOREIGN ACTIVITIES OF NATIONAL BANKS
AMENDMENT TO REGULATION M

Effective April 1,1971, footnote 8 to § 213.7 (a)
of Regulation M is amended to read as follow s:
SECTION 213.7 — R ESERVES AGAINST
FOREIGN BRANCH DEPOSITS
(a) Transactions with parent bank. * * *
*

*

*

8 Including the principal amount paid by a for­
eign branch of the member bank for obligations
held by such branch that were purchased by it
from the Export-Import Bank of the United
States pursuant to its program announced on
January 15, 1971, or purchased by it from the
U. S. Treasury pursuant to its program an­
nounced on April 1, 1971, and excluding assets
representing credit extended to persons not resi­
dents of the United States.

P R IN T E D IN N E W YO R K