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FEDERAL RESERVE BANK
OF NEW YORK
Circular No. 9182
November 12, 1981
TECHNICAL AMENDMENT TO REGULATION Q
Definition of International Banking Facility Time Deposit
To All Depository Institutions in the Second
Federal Reserve District, and Others Concerned:
The Board of Governors of the Federal Reserve System has issued a technical
amendment to its Regulation Q, “Interest on Deposits,” in order to clarify the definition of
“international banking facility time deposit” or “IBF time deposit.” The amendment,
effective December 3, 1981, will parallel the definition set forth in Regulation D.
The original amendments to Regulations D and Q governing the establishment in the
United States of international banking facilities (IBFs) by U.S. depository institutions,
Edge and Agreement Corporations, and branches and agencies of foreign banks located in
the United States was sent to you with our Circular No. 9097, dated June 25, 1981.
Enclosed is a copy of the amendment. Questions regarding matters relating to IBFs
should be directed as follows:
Interpretations of Regulations D and Q:
Bradley K. Sabel, Assistant Counsel (Tel. No. 212-791-5222)
Joyce E. Motylewski, Attorney, Legal Department (Tel. No. 212-791-5031)
Reporting Requirements:
Richard J. Gelson, Assistant Vice President (Tel. No. 212-791-7904)
George R. Juncker, Manager, Consumer Affairs and Bank Regulations
Department (Tel. No. 212-791-5910)
Nancy Bercovici, Chief, Deposit Reports Division (Tel. No. 212-791-5794)
Registration Statements:
Barbara L. Walter, Manager, Foreign Banking Applications Department
(Tel. No. 212-791-5881)
A nthony M. S olomon ,
President.
FEDERAL RESERVE SYSTEM
R egulation Q
[12 CFR PART 217]
[Docket No. R-0214]
INTEREST ON DEPOSITS
In te rn a tio n a l Banking F a c ility Time D eposits
AGENCY:
Board of Governors of the Federal Reserve System.
ACTION:
Technical amendment to Final Rule.
SUMMARY: The Board of G overnors, a c tin g through i t s S e c re ta ry , pursuant
to d eleg ated a u th o rity , has amended the d e f in itio n of " in te rn a tio n a l
banking f a c i l i t y tim e d ep o sit" or "IBF tim e d e p o sit" to c la r if y th a t
IBFs e s ta b lis h e d by U nited S ta te s o ffic e s of d e p o sito ry in s titu tio n s ,
Edge and Agreement C o rp o ratio n s and U.S. branches and ag en cies of fo reig n
banks may issu e such d e p o sits exempt from in te r e s t ra te lim ita tio n s
w ith m a tu ritie s of one day to any o ffic e lo c a te d o u tsid e th e U nited
S ta te s of another U.S. d e p o sito ry in s titu tio n , fo re ig n bank, or Edge
or Agreement C o rp o ratio n , to o th er IBFs, to fo re ig n c e n tra l banks and
o f f i c i a l in s titu tio n s , as w ell as to the fo re ig n branches and dom estic
o p e ra tio n s of the d e p o sito ry in s titu tio n e s ta b lis h in g the IBF.
EFFECTIVE DATE: December 3, 1981.
FOR FURTHER INFORMATION CONTACT: G ilb e rt T. Schw artz, A sso ciate G eneral
C ounsel (202/452-3625), or Paul S. P ile c k i, Senior A ttorney (202/4523281), L egal D iv isio n , Board of G overnors of the F ed eral R eserve System,
W ashington, D.C. 20551.
SUPPLEMENTARY INFORMATION: On June 18, 1981, the Board of Governors
announced amendments to R egulation D— Reserve R equirem ents of D epository
I n s titu tio n s (12 CFR P a rt 204) and R egulation Q— I n te r e s t on D eposits
(12 CFR P a rt 217) to a u th o riz e beginning December 3, 1981, the estab lish m en t
in the United States of international banking facilities ("IBFs") by
U .S. d e p o sito ry i n s titu tio n s , Edge and Agreement C o rp o ra tio n s, and branches
and ag en cies of fo re ig n banks lo c a te d in the U nited S ta te s (46 F.R.
32426) . Under the ru le s adopted by th e Board, an IBF may accept d e p o sits
from fo re ig n re s id e n ts (in clu d in g banks) or from o th er IBFs exempt from
re se rv e requirem ents of R egulation D and from in te r e s t ra te lim ita tio n s
o f R eg u latio n Q. Funds ra ise d by an IBF could be used only to extend
c r e d it to ,fo re ig n re s id e n ts , to o th e r IBFs, or to the in s titu tio n e s ta b lis h in g
th e IBF.—
1 / Funds d eriv ed by an in s titu tio n from i t s own IBF would be su b je c t
E urocurrency re se rv e req u irem en ts.
To
[Enc. C ir. No. 9182]
-2-
The re g u la tio n s announced on June 18, 1981, s p e c if ic a lly d efin e
" in te r n a tio n a l banking f a c i l i t y tim e d e p o sit" or "IBF tim e d ep o sit"
to in clu d e o v e rn ig h t o b lig a tio n s issu ed by an IBF to any o ffic e lo c a te d
o u ts id e the U nited S ta te s of another U.S. d e p o sito ry in s titu tio n , fo reig n
banks, or Edge or Agreement C o rp o ratio n , to o th er IBFs, to fo re ig n c e n tra l
banks and o f f i c i a l i n s titu tio n s , as w ell as to the fo re ig n branches
and dom estic o p e ra tio n s of the d e p o sito ry in s titu tio n e s ta b lis h in g the
IBF. T his d e f in itio n , in co n ju n ctio n w ith o th er p ro v isio n s of R egulation D,
exempt such o b lig a tio n s from re se rv e req u irem en ts. A s im ila r p ro v isio n
was not in c o rp o ra te d in R egulation Q, sin ce o b lig a tio n s issu ed to such
e n t i t i e s are p re s e n tly exempt from in te r e s t ra te lim ita tio n s . However,
q u e stio n s have been ra ise d as to w hether an IBF may issu e o v ern ig h t
l i a b i l i t i e s to such e n t i t i e s in the form of a d e p o sit ra th e r than a
borrow ing w ith o u t regard to in te r e s t ra te lim ita tio n s . To c la r if y th a t
IBFs may issu e o v ern ig h t d e p o sits to o th er banking e n t i t i e s , the Board
has amended R egulation Q so th a t i t s d e f in itio n of " in te rn a tio n a l banking
f a c i l i t y tim e d ep o sit" or "IBF tim e d e p o sit" p a r a lle ls the d e fin itio n
in R eg u latio n D.
Since th is te c h n ic a l amendment c l a r i f i e s a c tio n p re v io u sly
taken on which n o tic e and p u b lic procedure were observed p u rsu an t to
5 U .S.C . § 553(b) and does not a lte r the su b stan ce of th a t a c tio n ,
th e Board fin d s th a t such procedures are unnecessary w ith regard to
th is a c tio n . A ccordingly, e ffe c tiv e December 3, 1981, the Board of
G overnors, a c tin g through i t s S e c re ta ry p u rsu an t to d eleg ated a u th o rity
(12 CFR 265.2 (a) (1 1 )), amends R egulation Q (12 CFR P a rt 217) by changing
paragraph (1) o f s e c tio n 217.1 (published a t 46 FR 32426) to read as
fo llo w s :
SECTION 217.1 - - DEFINITIONS
* * * * *
(1) " In te rn a tio n a l banking f a c i l i t y tim e d e p o s it" or "IBF
tim e d e p o sit" means a d e p o s it, placem ent, borrow ing or sim ila r o b lig a tio n
re p re se n te d by a prom issory n o te , acknowledgment of advance, or sim ila r
in stru m en t th a t is not issu ed in n e g o tia b le or b earer form , and
(1) (i) th a t must rem ain on d e p o sit a t the IBF a t le a s t
o v e rn ig h t; and
( ii) th a t is issu ed to
(A)
any o ffic e lo c a te d o u tsid e the U nited S ta te s
o f an o th er d e p o sito ry in s titu tio n organized under the laws of the U nited
S ta te s or of an Edge or Agreement C o rp o ratio n ;
i
*
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o f a fo re ig n bank;
(B)
any office located outside the United States
(C) a United States office of a non-United States
office of the entity establishing the IBF;
(D)
another IBF; or
(E) an in s titu tio n whose tim e d e p o sits are exempt
from in te r e s t ra te lim ita tio n s under se c tio n 217.3(g) o f th is P a rt;
or
(2)
(i)
that is payable
(A) on a specified date not less than two business
days after the date of deposit;
(B) upon expiration of a specified period of time
not less than two business days after the date of deposit; or
(C) upon written notice that actually is required
to be given by the depositor not less than two business days prior to
the date of withdrawal;
(ii) that represents funds deposited to the credit of
a non-United States resident or a foreign branch, office, subsidiary,
affiliate, or other foreign establishment ("foreign affiliate") controlled
by one or more domestic corporations provided that such funds are used
only to support the operations outside the United States or the depositor
or of its affiliates located outside the United States; and
(iii) that is maintained under an agreement or arrangement
under which no deposit or withdrawal of less than $100,000 is permitted,
except that a withdrawal of less than $100,000 is permitted if such
withdrawal closes an account.
By order of the Board of G overnors, a c tin g through i t s S e c re ta ry
p u rsu an t to d eleg ated a u th o rity , O ctober 30, 1981.
(Signed)
William W. Wiles
William W. Wiles
Secretary of the Board
[SEAL]
@FedFRASER