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FEDERAL RESERVE BANK OF NEW YORK Circular No. 8844 June 6, 1980 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS Comment Invited on Proposed Regulation D To Implement Monetary Control Act of 1980 To A ll Depository Institutions (Other Than U.S. Branches and Agencies o f Foreign Banks and Edge and Agreement Corporations), and Others Concerned, in the Second Federal Reserve District: E n c lo se d are a p ress release an d a p ro p o sed reg u la tio n o n R eserve R eq u irem en ts o f D e p o sito r y In stitu tio n s (F ed eral R eserve R e g u la tio n D ). T h e p ro p o sed reg u la tio n p resen ts ch a n g es in th e reserve requ irem en t stru ctu re a n d th e c o m p u ta tio n o f reserve req u irem en ts arising fr o m th e M o n eta ry C o n tro l A c t o f 1980, u n d er w h ich reserve req u irem en ts are to b e im p o sed b y th e B o a rd o f G o v ern o rs o f th e F ed eral R eserve S y stem o n all d e p o sito r y in stitu tio n s in th e U n ite d S tates th a t h a v e tra n sa ctio n s a cc o u n ts or n o n p er so n a l tim e d e p o sits. C o m m e n ts o n th e p r o p o se d re g u la tio n m a y b e sen t to ou r L eg a l D ep a rtm en t an d sh o u ld b e su b m itted b y Ju ly 15, 1980. F o llo w in g a review o f co m m en ts received b y th e F ed eral R eserve, issu a n ce o f a fin a l re g u la tio n is ex p ec ted in A u g u st 1980. U n d er th e p r o p o se d re g u la tio n , a m em b er b an k w ill c o n tin u e to m a in tain reserves in th e fo r m o f v a u lt ca sh a n d b a la n ces h eld d irectly w ith its F ed eral R eserve B a n k . A d ep o sito ry in stitu tio n th a t is n o t a m em b er o f th e F ed eral R eserve S y stem an d th at is required to m a in ta in reserve b a la n ces in excess o f its v a u lt cash m a y elec t to d o so eith er (1) b y esta b lish in g a reserve a cc o u n t d irectly w ith th e F ed eral R eserve, or (2) by esta b lish in g a co r resp o n d e n t reserve a c c o u n t w ith (a) a n o th er d ep o sito ry in stitu tio n th at m a in ta in s required reserve b a la n ces w ith th e F ed eral R eserve, (b) a F ed eral H o m e L o a n B a n k , or (c) th e N a tio n a l C red it U n io n A d m in istra tio n C entral L iq u id ity F acility. In the seco n d case, th e reserve b alan ces held b y th e corresp on d en t m u st b e “ p a ssed th r o u g h ’’ to th e F ed eral R eserve o n b e h a lf o f th e resp o n d en t in stitu tio n . F u rth er in fo r m a tio n regard in g th e esta b lish m en t o f su ch a “ p ass th r o u g h ’’ arran gem en t is ex p ected to b e a v a ila b le b y early Ju ly an d w ill b e p ro v id ed to all d ep o sito ry in stitu tio n s. A ll d ep o sito r y in stitu tio n s w ith reservab le d ep o sits w ill b e required to su b m it d irectly to th e F ed eral R eserve B an k a w eek ly report o f d e p o sits co n ta in in g d aily in fo r m a tio n , regardless o f w h eth er th e rep ortin g in stitu tio n m u st h o ld reserve b a la n ces or w h eth er a n y required reserve b a la n ces are h eld d irectly w ith th e F ed era l R eserve or in d irectly th ro u g h a “ p ass th r o u g h ’’ arran gem en t. A list o f th e item s to b e rep orted is in clu d e d in th e p ro p o sed re g u la tio n . W e w ill p ro v id e rep ortin g fo rm s an d in stru ctio n s fo r th e d ep o sits rep o rts, as w ell as th e in fo r m a tio n n ecessary fo r th e ca lcu la tio n o f reserve req u irem en ts, as s o o n as p o ssib le fo llo w in g th e issu a n ce o f th e fin a l reg u la tio n . T h e M o n eta ry C o n tro l A c t a lso requires th at th e F ed eral R eserve p rice its services an d p ro v id e a ccess to th ese services to all d ep o sito r y in stitu tio n s. P ricin g p rin cip les an d a sch ed u le fo r p ricin g o f F ed eral R eserve services w ill b e p u b lish ed fo r co m m e n t by S ep tem b er 1980. It is a n ticip a ted th a t th e im p le m e n ta tio n o f th e M o n eta ry C o n tr o l A c t w ill en a b le th e F ed eral R eserve to c o n d u c t m o n eta ry p o lic y m o re e ffe c tiv e ly . T h e F ed eral R eserve is aw are, h o w ev er, o f th e d iffic u ltie s th at m ay b e e n co u n ter ed b y d e p o sito r y in stitu tio n s as ad ju stm en ts are m a d e to th e n ew rep ortin g req u irem en ts an d reserve c o m p u ta tio n p ro ced u res. W e lo o k forw ard to w o rk in g w ith y o u to m in im ize th e p ro b lem s a sso c ia te d w ith th e im p le m e n ta tio n o f th e M o n eta ry C o n tro l A c t. A nthony M. Solomon, President.
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