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FEDERAL RESERVE BANK
OF NEW YORK
/ / kld'jtd'
O ctob er 12, 1979
To Member Banks, Edge and Agreement Corporations,
Branches and Agencies of Foreign Banks, and Others Concerned,
in the Second Federal Reserve District:
E n c lo se d is a cop y o f th e te x t o f th e R e g u la tio n D c h a n g e s r e la tin g to th e n e w ly
e sta b lish e d 8 p e r c e n t m a r g in a l re se r v e r e q u irem en t, in th e form in w h ich it w a s su b m itte d
for p u b lic a tio n in th e
Federal Register. A rev ised S u p p le m e n t to R eg u la tio n D , c o n ta in in g
th e t e x t o f th e c h a n g e s in a form su ita b le for in se rtio n in you r R eg u la tio n b in d er, w ill be
sen t to you sh o rtly .
A d d itio n a l co p ie s o f th e e n c lo su re w ill be fu r n ish e d upon req u est.
T homas M. T im l e n ,
First Vice President.
' J/fo ' f&slL
TITLE 12— 3ANKS AND BANKING
CHAPTER II— FEDERAL RESERVE SYSTEM
SUBCHAPTER A— BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
[Regulation D]
(Docket No. R-0218)
PART 204— RESERVES OF MEMBER 3ANKS
Marginal Reserve Requirements
AGENCY:
Board of Governors of the Federal Reserve System.
ACTION:
Final rule.
SUMMARY:
The Board of Governors has amended Regulation D to establish
a marginal reserve requirement of 3 per cent on the amount by which
the total of certain managed liabilities of member banks (and Edge and
Agreement Corporations) and United States branches and agencies of foreign
banks exceeds the amount of such managed liabilities outstanding during
a base period.
The purpose of this action is to better control the
expansion of bank credit, help curb speculative excesses in financial,
foreign exchange and commodity markets and thereby serve to dampen inflationary
forces.
The managed liabilities affected by this action include the
total of (1) time deposits in denominations of $100,000 or more with
original maturities of less than one year;
(2) Federal funds borrowings
with original maturities of less than one year from U.3. offices of
depository institutions not required to maintain Federal reserves and
from U.S. government agencies;
(3) repurchase agreements with original
maturities of less than one year on U.S. government and agency securities
entered into with parties other than institutions required to maintain
Federal reserves; and (4) Eurodollar borrowings from foreign banking
-2 -
offices, asset sales to related foreign offices, and member bank foreign
office loans to U.S. residents.
The marginal reserve requirement will
not apply to borrowings from the United States, principally in the form
of Treasury tax and loan account note balances.
The 8 per cent marginal
reserve requirement will apply to the amount by which the daily average
amount of an institution's total managed liabilities during a reserve
computation period exceeds a base amount calculated generally as either
the daily average amount of such liabilities outstanding during the
base period (September 13 to 26, 1979) or $100 million, whichever is
greater.
EFFECTIVE DATE:
With regard to member banks (and Edge and Agreement
Corporations), the marginal reserve requirement is effective on marginal
total managed liabilities outstanding during the seven-day computation
period beginning October 11, 1979, and reserves will be required to
be maintained against such marginal total managed liabilities during
the seven-day period beginning on October 25, 1979.
With regard to
U.S. branches and agencies of foreign banks, the marginal reserve requirement
also is effective on marginal total managed liabilities outstanding
during the seven-day computation period beginning October 11, 1979.
However, such institutions will not be required to maintain marginal
reserves until the seven-day period beginning on November 8, 1979.
During the seven-day period beginning on November 3, 1979, the U.S.
reporting office of a U.S. branch and agency family will be required
to maintain marginal reserves for the family for the seven-day computation
periods beginning October 11, 18, and 25.
-3 -
FOR FURTHER INFORMATION CONTACT:
Gilbert T. Schwartz, Assistant General
Counsel (202/452-3623); Anthony F. Cole, Senior Attorney (202/452-3711);
or Paul S. Pilecki, Attorney (202/452-3281), Legal Division, Board of
Governors of the Federal Reserve System, Washington, D.C. 20551.
SUPPLEMENTARY INFORMATION:
Hie Board of Governors has amended Regulation D
(12 C.F.R. Part 204) to impose a marginal reserve requirement of 8 per
cent on the amount by which the total managed liabilities of certain
institutions exceeds the amount of the institution's base amount of
managed liabilities.
Generally, an institution's base is the daily
average amount of the institution's total managed liabilities outstanding
during the base period (September 13-26, 1979) or $100 million, whichever
is greater.
The marginal reserve requirement will apply to member banks,
Edge and Agreement Corporations, and families of U.S. branches and agencies
of foreign banks whose foreign parents have worldwide banking assets
in excess of $1 billion.
The managed liabilities of U.S. branches and
agencies of the same foreign bank family will be reported on a consolidated
basis.
The managed liabilities on which marginal reserves will apply
include the total of (1) time deposits in denominations of $100,000
or more with original maturities of less than one year;
(2) Federal
funds borrowings with original maturities of less than one year from
U.S. offices of depository institutions not required to maintain Federal
reserves and from U.S. government agencies;
(3) repurchase agreements
with original maturities of less than one year on U.S. government and
agency securities entered into with parties other than institutions required
to maintain Federal reserves; and (4) Eurodollar borrowings from foreign
-4 -
b an k in g o f f i c e s
to
re la te d
o f t h e sam e i n s t i t u t i o n
fo re ig n o f f ic e s ,
fo re ig n o ffic e
lo an s
or o f e th e r banks, a s s e t
sa le s
a n d member b a n k a n d E dge a n d A g r e e m e n t C o r p o r a t i o n
to U .S .
re s id e n ts .
T im e D e p o s i t s o f $ 1 0 0 , 0 0 0 o r More
M anaged l i a b i l i t i e s
in c lu d e d e p o s its o f th e
(a )
fo llo w in g
th e m a rg in a l r e s e r v e
re c u ire m e n t-
ty p e s:
T im e d e p o s i t s o f $ 1 0 0 , COO o r m ore w i t h o r i g i n a l m a t u r i t i e s
o f le ss
(b)
s u b j e c t to
th a n one y e a r ;
and
T im e d e p o s i t s o f $ 1 0 0 , 0 0 0 o r m o re w i t h o r i g i n a l m a t u r i t i e s
o f le ss
th an one y ea r
re p resen te d
by p r o m i s s o r y n o t e s ,
ack n o w led g em en ts o f a d v a n c e , due b i l l s ,
(w ritte n or o ra l)
as p ro v id ed
or sim ila r o b lig a tio n s
in § 2 0 4 .1 (f)
o f R eg u latio n
D; a n d
(c)
:• r
T im e d e p o s i t s
of
le ss
o f any d e n o m in a tio n w ith re m a in in g m a t u r i t i e s
th an one y ea r
r e p r e s e n t e d by i n e l i g i b l e
a c c e p ta n c e s or o b lig a tio n s
a ffilia te
to
to
issu e d
th e e x t e n t t h a t
by a member b a n k ' s
th e p ro c e e d s a re
t h e member b a n k a s p r o v i d e d
b an k ers'
in § 2 0 4 .1 (f)
su p p lie d
o f R e g u l a t i o n D.
C r e d i t b a l a n c e s o f $ 1 0 0 , 0 0 0 o r m o re w i t h o r i g i n a l m a t u r i t i e s o f 30 d a y s
o r m o re b u t l e s s
s u b j e c t to
to
th an one y ear w ill a ls o
th e m a rg in a l r e s e r v e
th e m a rg in a l re s e rv e
be t r e a t e d
re q u ire m e n t.
T im e d e p o s i t s
r e q u i r e m e n t do n o t i n c l u d e
and C h r is tm a s c l u b - t y p e d e p o s i t s .
a s m anaged l i a b i l i t i e s
su b je c t
sav in g s d e p o s its
U .S . b r a n c h e s and a g e n c i e s o f f o r e i g n
banks g e n e r a lly w i l l be re q u ire d
to m a in ta in m a rg in a l r e s e r v e s b ased
on s i m i l a r
b u t w i l l n o t be re q u ire d
ty p es o f o b lig a tio n s ,
th e
b a sic
and
(2 )(i i ) .
reserv e
re q u ire m e n ts
im p o sed on tim e d e p o s i t s
to m a in ta in
under
§ 2 0 4 . 5 ( a ) (1) ( i i )
-5 -
F e d e r a l F u n d s and R e p u rc h a s e A g re em en ts
On A p r i l 1 3 ,
1979,
th e B oard s o l i c i t e d
F e d . R e g . 23 8 6 7) o n a p r o p o s a l t o a p p l y r e s e r v e
p u b l i c com m ent
re q u ire m e n ts
member b a n k F e d e r a l f u n d s b o r r o w i n g s a n d t o c e r t a i n
e n te re d
in to
by member b a n k s .
(44
to c e r t a i n
re p u rc h a s e ag reem en ts
Under th e B o a r d 's A p r i l p r o p o s a l ,
member
b an k b o r r o w i n g s fro m U .S . o f f i c e s o f o t h e r b a n k s w hose l i a b i l i t i e s
n o t s u b j e c t to F e d e r a l r e s e r v e
and i t s
r e q u ir e m e n t s and from th e U .S . g o v e rn m e n t
a g e n c i e s w o u ld h a v e b e e n t r e a t e d
s u b j e c t to a 3 p e r c e n t c e n t r e s e r v e
a s a new c a t e g o r y o f t i m e d e p o s i t
re q u ire m e n t.
The B o a r d ' s A p r i l p r o p o s a l a l s o w o u l d h a v e t r e a t e d
member b a n k b o r r o w i n g s i n t h e
ag reem en ts e n te r e d
as d e p o sits
f o r m o f r e p u r c h a s e a g r e e m e n t s b a s e d on
U .S . g o v e r n m e n t and a g e n c y s e c u r i t i e s .
been s u b j e c t to a 3 p e r
are
Such o b l i g a t i o n s w o u ld h a v e
c e n t re s e rv e re q u ire m e n t.
H ow ever, r e p u r c h a s e
i n t o by a member b a n k w i t h U . S . b a n k i n g o f f i c e s o f
o t h e r member b a n k s o r o t h e r o r g a n i z a t i o n s
s u b j e c t to F e d e r a l re s e rv e
r e q u i r e m e n t s a n d w i t h t h e F e d e r a l R e s e r v e B a n k s w o u ld h a v e c o n t i n u e d
t o b e ex e m p t fro m r e s e r v e
re q u ire m e n ts.
A f t e r c o n s i d e r a t i o n o f t h e m o re t h a n 350 c o m m en ts r e c e i v e d
f r o m t h e p u b l i c on t h i s p r o p o s a l ,
in a m o d ified
form .
th e 3 o ard h as ad o p ted th e p ro p o s a l
The B o a r d h a s d e t e r m i n e d
to
tre a t c e rta in
F ederal
f u n d s b o r r o w i n g s a n d r e p u r c h a s e a g r e e m e n t s o f member b a n k s , E d g e a n d
A greem ent C o r p o r a t i o n s ,
a s m anaged l i a b i l i t i e s
Under t h i s
o f le ss
approach,
th a n one y e a r
and U .S .
s u b je c t to
b ra n c h e s and a g e n c ie s o f f o r e i g n banks
th e m a rg in a l re s e r v e
re q u ire m e n t.
t h e am ount o f b o r r o w in g s w i t h o r i g i n a l m a t u r i t i e s
from U .S . o f f i c e s o f o t h e r b a n k s whose l i a b i l i t i e s
-o —
are
n o t s u b j e c t to F e d e r a l r e s e r v e
r e q u ir e m e n t s and from a g e n c i e s o f
th e U n ited S ta t e s
( t o g e t h e r w i t h o t h e r m anaged l i a b i l i t i e s )
th e
base,
i n s t it u t i o n 's
re q u ire m e n t.
re q u ire m e n t i s
and to
w i l l b e s u b j e c t t o an 8 p e r c e n t m a r g i n a l r e s e r v e
The B o a r d b e l i e v e s
from i n s t i t u t i o n s
m a in ta in in g
a p p ro p ria te
to
t h a t ex em p tin g F e d e r a l fu n d s b o rro w in g s
F ederal reserv es
fa c ilita te
th e
from th e m a r g i n a l r e s e r v e
re s e rv e a d ju stm en t p ro c e ss
a v o id th e p o s s i b i l i t y o f im p o sin g d o u b le F e d e r a l r e s e r v e
on l i a b i l i t i e s
a t an o th e r
t h a t a l r e a d y may b e s u b j e c t t o F e d e r a l r e s e r v e
th e
w i l l n o t b e r e g a r d e d a s m anaged l i a b i l i t i e s
re q u ire m e n t.
one y ear
re q u ire m e n ts
(p rin c ip a lly
fo rm o f T r e a s u r y t a x and l o a n a c c o u n t n o t e b a l a n c e s ) ,
reserv e
re q u ire m e n ts
in stitu tio n .
B o rro w in g s from th e U n ite d S t a t e s g o v e rn m e n t
in
th a t exceeds
s u b j e c t to
how ever,
th e m a rg in a l
B o rro w in g s w ith o r i g i n a l m a t u r i t i e s o f l e s s
fro m F e d e r a l a g e n c i e s and i n s t r u m e n t a l i t i e s
th an
such as th e F e d e ra l
Horae L o an 3 a n k B o a r d a n d t h e F e d e r a l Home L o an B a n k s w i l l b e s u b j e c t
to
th e m a rg in a l r e s e rv e
In th e p a s t ,
to
re q u ire m e n t.
th e term
in c lu d e co m m ercial b a n k s ,
c o o p e rativ e
(see
banks,
12 C . F . R .
in te re st
c re d it
ra te
sav in g s banks,
s a v i n g s and l o a n a s s o c i a t i o n s ,
t h e E x p o r t - I m p o r t B a n k , a n d M in b a n c C a p i t a l C o r p o r a t i o n
§ 2 1 7 .1 3 7 ).
p ro v isio n s)
u n io n s.
" b a n k " h a s b e e n d e f i n e d by th e 3 o a r d
For p u rp o s e s o f r e s e r v e
th e
term
"bank"
is
re q u ire m e n ts
b ein g m o d ifie d
m arg in a l re s e rv e
in clu d e
C o n s e q u e n t l y , w h i l e b o r r o w i n g s f r o m s u c h nonm em ber i n s t i t u t i o n s
b y member b a n k s w i l l b e r e g a r d e d a s m a n a g e d l i a b i l i t i e s
b a sic re serv e
to
(a n d
re q u ire m e n t,
s u b j e c t to th e
s u c h b o r r o w i n g s w o u ld b e e x e m p t f r o m t h e
r e q u i r e m e n t s o f R e g u l a t i o n D.
-7 -
3 o r r o w in g s from d o m e s tic o f f i c e s o f o r g a n i z a t i o n s
re q u ire d
by t h e B o a r d t o m a i n t a i n r e s e r v e s
and fro m F e d e r a l R e s e r v e
B an k s w i l l n o t b e r e g a r d e d a s m anaged l i a b i l i t i e s
reserv e
re q u ire m e n t.
m ain tain - r e s e r v e s
th e
T he i n s t i t u t i o n s
s u b je c t to
th a t c u rre n tly
are
th e m a rg in a l
re q u ire d
to
i n c l u d e member b a n k s , E d g e C o r p o r a t i o n s e n g a g e d i n
b an k in g b u s in e s s
(1 2 O . S . C .
§§ 6 0 1 - 6 0 4 a ) , o p e r a t i o n s
§ 2 0 4 .1 1 7 ),
th a t are
and, under
§ 6 1 5 ),
A greem ent C o r p o r a ti o n s
s u b s i d i a r i e s o f member b a n k s
th is
a c tio n ,
b an k s w ith w o rld w id e b a n k in g a s s e t s
(12 U . S . C .
(12 C . F . R .
U .S . b r a n c h e s and a g e n c i e s o f f o r e i g n
i n e x c e s s o f $1 b i l l i o n
(1 2 U . S . C .
§ 3105).
U nder t h e 3 c a r d ' s
a c tio n ,
b o rro w in g s in th e
ag reem en ts w ith o r i g i n a l m a t u r i t i e s o f l e s s
U .S . g o v e rn m e n t and ag e n c y s e c u r i t i e s
lia b ilitie s
th an one y e a r
in v o lv in g
a l s o w o u ld b e r e g a r d e d a s m anaged
s u b j e c t to th e m a rg in a l r e s e r v e r e q u ir e m e n t.
ag reem en ts e n te r e d
th a t are
form o f r e p u r c h a s e
R epurchase
i n t o w i t h U . S . o f f i c e s o f o t h e r member b a n k s o r o r g a n i z a t i o n s
r e q u i r e d by t h e 3 o a r d
to m a in ta in r e s e r v e s w ith th e F e d e r a l
R e s e r v e S y s t e m w o u ld n o t b e r e g a r d e d a s m a n a g e d l i a b i l i t i e s
to
th e m a rg in a l r e s e r v e
in to
by member b a n k s ,
re q u ire m e n t.
su b je c t
R ep u rch ase ag reem en ts e n te r e d
b a n k i n g E dge a n d A g r e e m e n t C o r p o r a t i o n s ,
b r a n c h e s and a g e n c i e s o f f o r e i g n b an k s w ith n o n ex em p t e n t i t i e s ,
a s nonraember b a n k s a n d n o n b a n k d e a l e r s ,
reserv e
to
re q u ire m e n t i f
nonexem pt e n t i t i e s
w ith
such t r a n s a c t i o n s
in o rd e r
to engage
such
w i l l n o t be s u b j e c t to th e m a rg in a l
are
in te n d e d to p ro v id e c o l l a t e r a l
in re p u rc h a se
t h e F e d e r a l R e s e r v e S y s t e m Open M a r k e t A c c o u n t .
and U .S .
tra n sa c tio n s
-9 -
In o rd e r
bank d e a le r s
to c o n tin u e to
fa c ilita te
th e a c t i v i t i e s
i n th e U .S . g o v e rn m e n t and a g e n c y s e c u r i t i e s
to p ro v id e c o m p e titiv e
e q u a lity
of
m ark e ts,
b etw e e n bank and n onbank d e a l e r s ,
a m e n d m e n t p e r m i t s member b a n k s , E d g e a n d A g r e e m e n t C o r p o r a t i o n s ,
U .S .
th e
and
b r a n c h e s and a g e n c i e s o f f o r e i g n b a n k s to d e d u c t t h e am ount o f
U . S . g o v e r n m e n t a n d a g e n c y s e c u r i t i e s h e l d by t h e
tra d in g
in to
account
from th e
t o t a l am ount o f i t s
w ith nonexem pt e n t i t i e s
in d e te rm in in g
th e am ount o f i t s
re p re se n ts
t h e U .S . g o v e rn m e n t and a g e n c y s e c u r i t i e s
re q u ire m e n t.
t r a n s a c t i o n s —l . e . , s e c u r i t i e s p u rc h ased w ith
th e y w i l l be r e s o ld
th a t
in stitu tio n s
h e ld
in
th e ir
ra th e r
th an h e ld
M anaged l i a b i l i t i e s
re q u ire m e n t a ls o w i l l
a c c o u n ts
s u b j e c t to
to
reserv e
proceeds o f a tra n s f e r
o f th e
in te n tio n
for
th a t
The B o a r d e x p e c t s
th e ir
tra d in g
acco u n ts
re q u ire m e n ts.
th a t a rise s
in s e c u r i t i e s
from a b c r ro w in g
w hose l i a b i l i t i e s
are
re q u ire m e n ts o f th e F e d e r a l R eserv e Act o f
o f d e p o sit c r e d it
im m e d ia te ly a v a i l a b l e
lo an
th e
h eld
th e 8 p er c e n t m a rg in a l r e s e r v e
in c lu d e any o b l i g a t i o n
f o r one b u s i n e s s day fro m a d e a l e r
o th e r
th a t are
account
w i l l n o t r e c l a s s i f y U .S . g o v e rn m e n t and ag e n cy s e c u r i t i e s
in v e stm e n t or o th e r
th e
rep u rch ase
A tra d in g
a s an in v e s tm e n t.
th e p u rp o s e o f a v o id in g m a r g in a l r e s e r v e
n o t s u b j e c t to
in i t s
re p u rc h a s e ag reem en ts e n te r e d
s u b j e c t to
d e a le r
th e m a rg in a l r e s e rv e
in s titu tio n
ag reem en ts
fo r
and
in a F e d e r a l R eserv e 3ank
fu n d s ), re c e iv e d
(or
by s u c h d e a l e r on t h e d a t e
in c o n n e c tio n w ith c le a r a n c e o f s e c u r i t i e s
tra n sa c tio n s.
E u ro d o lla rs
The B o a r d a l s o h a s
banks,
of
in c lu d e d
th e E u ro d o lla r
Edge a n d A g r e e m e n t C o r p o r a t i o n s
fo re ig n
b a n k s a s m anaged l i a b i l i t i e s
and U .S .
su b je c t
b o r r o w i n g s o f member
b r a n c h e s and a g e n c i e s
to th e m a rg in a l r e s e r v e
-9 -
re q u ire m e n t.
C o n se q u e n tly ,
o t h e r m anaged l i a b i l i t i e s )
th e am ount o f E u r o d o l l a r s
o f a member b a n k , Edge o r A g r e e m e n t C o r p o r a t i o n ,
o r U .S . b ra n c h or ag e n cy t h a t e x c e e d s th e
s u b j e c t to
i n s t it u t i o n 's
b a se w i l l be
th e 8 p er c e n t m a rg in a l r e s e r v e re q u ir e m e n t.
W ith r e g a r d
t o member b a n k s a n d E dge a n d A g r e e m e n t C o r p o r a t i o n s ,
in c lu d e
th e
(to g e th e r w ith
in s t it u t i o n 's
o rig in a l m a tu ritie s
d a i l y av e rag e b a la n c e o f
of le ss
th an one y ear
such E u r o d o lla r s
(1)
b o rro w in g s w ith
from f o r e i g n o f f i c e s
b a n k s and i n s t i t u t i o n s
t h a t a r e exem pt from i n t e r e s t r a t e
p u r s u a n t to § 2 1 7 .3 (g )
o f R e g u l a t i o n Q;
i n s t it u t i o n 's
(3 )
a sse ts
d o m estic o f f i c e s
(in clu d in g
t h a t w ere a c q u i r e d
and
th e c r e d i t c u ts ta n d in g
t o U .S .
fro m t h e
in c lu d e
p u r s u a n t to § 2 1 7 .3 (g )
i n s t it u t i o n 's
fo re ig n
fo re ig n o f f ic e s
th an one y ear
fo re ig n p a re n t
su b sid ia rie s
th e
b o rro w in g s
from n o n -U .S . o f f i c e s
(2)
a sse ts
(in clu d in g
th e U .S .)
b r a n c h e s and a g e n c i e s
a n d t h e p a r e n t h o l d i n g c o m p an y
re q u ire d
fo re ig n p a re n t
lo c a te d o u tsid e
lim ita tio n s
(in c lu d in g p a r tic ip a tio n s )
fro m t h e U .S . b r a n c h e s o r a g e n c i e s
n e t b a la n c e s due to
(1)
t h a t a r e exem pt fro m i n t e r e s t r a t e
F e d e ra l su p e rv is o ry purposes are
and b a n k in g
i n e x c e s s o f $1 b i l l i o n ,
th e d a i l y a v e rag e b a la n c e o f
lo c a te d o u tsid e
t h a t w ere a c q u i r e d
i n s t it u t i o n 's
i n s t i t u t i o n 's d o m estic o f f i c e s ;
o f R e g u l a t i o n Q;
t o a n d h e l d by t h e
and s u b s i d i a r i e s
(3)
h e l d by t h e
fo re ig n o f f ic e s ;
to U .S . b r a n c h e s and a g e n c i e s o f a f a m i l y o f a
o f o t h e r b an k s and i n s t i t u t i o n s
fo r
i n s t it u t i o n 's
from th e
w ith o r i g i n a l m a t u r i t i e s o f le s s
th a t
(2) n e t b a l a n c e s d u e f r o m an
bank w ith w o rld w id e b a n k in g a s s e t s
such E u ro d o lla r s
so ld
lim ita tio n s
re sid e n ts.
W ith r e g a r d
fo re ig n
th e
p a rtic ip a tio n s)
o ffic e s
(4 )
to
o f o th e r
to b e s o ld ) ; and
(in c lu d in g
th e U .S .)
(ex cep t a s s e ts
b r a n c h e s and a g e n c i e s
and th e p a r e n t h o ld in g
-1 0 -
com pany a f t e r
d e d u c tin g
an am ount e q u a l t o 8 p e r c e n t o f t h e
o f th e U .S . b r a n c h e s and a g e n c i e s ,
le ss
item s
or o th e r
in
th e p r o c e s s o f c o l l e c t i o n
c e rta in
cash a s s e ts
to ta l a sse ts
(cash , cash
b a l a n c e s due fro m th e
fo reig n
f
p a r e n t bank o r r e l a t e d
in stitu tio n s
or u n re la te d
S i n c e U . S . b r a n c h e s a n d a g e n c i e s do n o t p o s s e s s
lik e
d o m estic b an k s,
co n trib u te
fo re ig n
th e 8 p er c e n t allo w an c e
to c o m p e t i t i v e e q u i t y and to
b an k in g o f f i c e s
o f co m m ercial p a p e r
in
issu ed
th e U .S .
in
th e
U .S . and f o r e i g n b a n k s ) .
a se p a ra te
is p ro v id ed
sa fe ty
th e U n ite d S t a t e s by th e
fu n d s a re p ro v id e d as E u ro d o lla r
in o rd e r
th a t p ro ceed s
f o r e i g n bank
re q u ire m e n ts o n ly
a d v a n c e s to
its
to
and s o u n d n e s s o f
( I t sh o u ld be n o te d
p a r e n t w i l l be s u b j e c t to m a rg in a l r e s e r v e
c a p ita l account
if
such
U .S . b r a n c h e s and a g e n c i e s . )
U .S . B ra n c h e s and A g e n c ie s o f F o r e ig n B anks
On J u l y 2 3 ,
1979,
t h e B o a r d r e q u e s t e d p u b l i c com m ent on a
p ro p o s a l to a p p ly F e d e r a l r e s e r v e
t o U .S . b r a n c h e s
The p e r i o d
1979.
r e q u ir e m e n ts and i n t e r e s t
and a g e n c i e s o f f o r e i g n b an k s
ra te
lim ita tio n s
(44 F e d . R e g . 4 4 8 7 6 ) .
f o r com m ent on t h e B o a r d ' s p r o p o s a l e x p i r e s o n N ovem ber 2 3 ,
The B o a r d ' s a c t i o n w i t h
on m anaged l i a b i l i t i e s
reg ard
to m a rg in a l re s e r v e
re q u ire m e n ts
o f U .S . b r a n c h e s and a g e n c i e s d o e s n o t r e f l e c t
a 3 o ard d e te r m in a tio n o f th e
Under t h e 3 o a r d ' s
issu e s
a c tio n ,
ra ise d
a ll
by t h e J u l y 23 p r o p o s a l .
r e p o r t s on t o t a l m anaged l i a b i l i t i e s
o f U . S . b r a n c h e s a n d a g e n c i e s o f t h e sam e f a m i l y m u s t b e r e p o r t e d on
a c o n so lid a te d
b a s i s by one U .S . o f f i c e
R eserv e 3ank o f th e d i s t r i c t
o f th e
fa m ily to
th e F e d e ra l
i n w hich th e r e p o r t i n g o f f i c e
is
lo c a te d .
-1 1 -
In tra -fa m ily
t r a n s a c t i o n s b etw e en U .S . b r a n c h e s and a g e n c i e s o f th e
sam e f a m i l y s h o u l d n o t b e i n c l u d e d
lia b ilitie s.
i n co m p u tin g
th e
A f o r e i g n bank f a m i l y c o n s i s t s o f t h e U .S . b r a n c h e s and
a g e n c i e s o f t h e sam e f o r e i g n p a r e n t b a n k a n d o f i t s
t h a n 50 p e r c e n t )
by th e
fa m ily to
f o r e i g n b an k in g s u b s i d i a r i e s .
file
R e s e r v e 3ank t o w hich i t
su b m its th e
o u ts ta n d in g p ro p o s a l c o n c e rn in g
F ederal reserv e
R eserve s e r v ic e s
and a c c e s s
w i l l be p e r m itte d
by d r a f t s
account
at
to
th is
(g re a te r
The o f f i c e d e s i g n a t e d
to m a in ta in th e
a c co u n t a t th e F e d e ra l
re p o rts.
re la tin g
to
In v iew o f th e
th e a p p l i c a ti o n o f
to U .S . b ra n c h e s and a g e n c i e s ,
F ederal
t h e F e d e r a l R e s e r v e d i s c o u n t w indow w i l l
tim e to U .S . b r a n c h e s and a g e n c i e s .
to be t r a n s f e r r e d
d r a w n on t h e f a m i l y ' s
w i l l n o t be a v a il a b le
f a m i l y 's
issu e s
re q u ire m e n ts
n o t b e made a v a i l a b l e
m a j o r i t y ow ned
re p o rts a ls o w ill be re q u ire d
m a rg in a l r e s e r v e s o f th e fa m ily in a re s e rv e
a ll
f a m i l y 's m anaged
Funds
by a U . S . b r a n c h o r a g e n c y o n l y
reserv e
a c co u n t.
A f a m ily 's
reserv e
fo r g e n e ra l c le a rin g p u rp o se s.
C o m p u ta tio n and M a in te n a n c e o f M a r g in a l R e s e r v e R e q u ire m e n ts
The a m o u n t o f m a r g i n a l r e s e r v e s
A greem ent C o r p o r a ti o n ,
bank t h a t
is
t h a t a member b a n k ,
Edge o r
o r a U .S . b r a n c h o r a g e n c y f a m i l y o f a f o r e i g n
a n e t b o r r o w e r o f m anaged l i a b i l i t i e s
w i l l be r e q u ir e d
C
t o m a i n t a i n w i l l b e d e t e r m i n e d by t h e a m o u n t b y w h i c h t h e t o t a l o f t h e
in s t it u t i o n 's
p e rio d
exceeds
m anaged l i a b i l i t i e s
th e
to ta l of
p e r i o d o r $100 m i l l i o n ,
is
its
d u rin g
m anaged l i a b i l i t i e s
w h ich ev er
is g r e a te r .
a n e t l e n d e r o f m anaged l i a b i l i t i e s
lia b ilitie s
is
n e g a tiv e
because
a g iv en sev e n -d ay r e s e r v e c o m p u tatio n
its
(th a t
d u rin g
th e base
F o r an i n s t i t u t i o n
is,
th e
n e t E u ro d o lla r
sum o f
lo an s
to
th a t
its
m anaged
its
fo re ig n
-1 2 -
o ffic e s
are g re a te r
rep u rch ase
a lg e b ra ic
if
sura o f i t s
th e base p e rio d ,
m anaged l i a b i l i t i e s
has n e g a tiv e
its
th e
$30 m i l l i o n ,
it
if
d u rin g
and m a r g i n a l
t o t a l m anaged l i a b i l i t i e s
s u c h an i n s t i t u t i o n
m ain tain ed
d u rin g a co m p u tatio n p e rio d
-would b e r e q u i r e d
to m a i n t a i n
th e 8 per
r e q u i r e m e n t a g a i n s t $20 m i l l i o n o f m a n a g e d l i a b i l i t i e s
e n d in g S ep tem b er
p e rio d
b e g in n in g O c to b e r
C o rp o ra tio n )
m anaged l i a b i l i t i e s
26, 1979.
25,
its
d a ily
D u rin g th e
d u rin g
th e
fo u rte e n -d a y
se v e n -d a y m ain ten an c e
1 9 7 9 , a member b a n k
w i l l be r e q u i r e d
o f 3 per c e n t o f
th e
am ount w i l l be d e te r m in e d from th e d a i l y a v e r a g e
i n s t it u t i o n 's
p e rio d
to m a in ta in a d a i l y
( a n d a n E dge o r A g r e e m e n t
av erag e re s e rv e b a lan c e
a v e r a g e m a r g i n a l m anaged l i a b i l i t i e s
s e v e n -d a y c o m p u ta tio n p e r io d b e g in n in g O c to b e r 1 1 ,
T h e re a fte r,
a member b a n k
be re q u ir e d
to m a in ta in
th e
For ex am p le,
r e s e r v e m ain ten an c e p e r io d .
t o t a l o f th e
fo r
b ase w i l l be th e
$150 m i l l i o n o f m a n a g e d l i a b i l i t i e s
C o n se q u e n tly ,
The b a s e p e r i o d
b a sis
its
F e d e ra l funds,
b a s e w i l l b e n e g a t i v e $50 m i l l i o n ,
c e n t m arg in a l re s e rv e
d u rin g
tim e ,
a n d $100 m i l l i o n .
a v e r a g e o f t o t a l m anaged l i a b i l i t i e s
o f n e g a tiv e
d u rin g
larg e
r e q u ir e m e n ts w i l l a p p ly to th e am ount o f i t s
ab o v e t h a t am o u n t.
a d a ily
to ta l of its
a g r e e m e n ts , and b orrow ed E u r o d o l l a r s ) ,
an i n s t i t u t i o n
reserv e
th an th e
th e
1979.
(a n d a n Edge o r A g r e e m e n t C o r p o r a t i o n )
its
m arg in a l re s e rv e
se v e n -d a y m ain ten an c e p e rio d
o u tsta n d in g
b a l a n c e on a d a i l y
w ill
av erag e
b e g in n in g e i g h t days a f t e r
end o f th e c o r r e s p o n d in g c o m p u ta tio n p e r io d .
D u rin g
th e
1979, a re p o rtin g
o ffic e
to m a in ta in a d a ily
o f th e
f a m i l y 's
sev e n -d ay m ain ten an ce p e r io d
o f a U .S . b ra n c h or a g e n c y f a m i l y w i l l be r e q u i r e d
average re s e rv e
d a ily
b e g i n n i n g N ovem ber 8 ,
b a la n c e o f 3 p er c e n t o f th e
a v e r a g e m a r g i n a l m anaged l i a b i l i t i e s
to ta l
o u tsta n d in g
-1 3 -
d u rin g
th e
th re e
s e v e n -d a y c o m p u ta tio n p e r i o d s b e g in n in g O c to b e r
18 a n d 2 5 , 1 9 7 9 .
and a g e n c ie s
1979,
sin c e
is b ein g d e f e r r e d
such i n s t i t u t i o n s
r e s e r v e s w ith
re p o rtin g
to
w i l l be r e p o r t in g
to s a t i s f y
th e
f a m ily 's
i n t h e sam e m a n n e r
As
t h e s e v e n - d a y c o m p u t a t i o n p e r i o d may b e
re q u ire d re s e rv e s .
tak en
to h e lp c u rb s p e c u l a t i v e
excesses
f o r e i g n e x c h a n g e a n d c o m m o d i ty m a r k e t s a n d t o m o d e r a t e
e x p a n s io n o f bank c r e d i t ,
t h e r e b y d am pening i n f l a t i o n a r y p r e s s u r e s .
to a c h ie v e th e above s t a t e d o b j e c t i v e s a s soon a s p o s s i b l e ,
th e B oard f o r good c a u s e
fin d s
th a t fu rth e r
n o tic e ,
p u b lic p ro ced u re,
and d e f e r r a l o f e f f e c t i v e d a te p r o v i s i o n s o f 5 U .S .C .
reg ard
th e
t h e U .S . c u r r e n c y and c o i n h e l d by U .S .
These a c t i o n s a r e b e in g
fin a n c ia l,
T h e re a fte r,
th e end o f th e c o r r e s p o n d i n g c o m p u ta tio n p e r i o d .
b ra n c h e s or a g e n c ie s d u rin g
In o rd e r
tim e .
th e se v e n -d a y m ain ten an c e p e r io d b e g in n in g
< .is t h e c a s e w i t h member b a n k s ,
in
first
and m a i n t a i n i n g
o f a U .S . b ra n c h o r a g e n c y f a m i l y w i l l be r e q u i r e d
a s a member b a n k i _ . e . , d u r i n g
used
th e
lia b ilitie s
th e f a m i l y 's m a rg in a l r e s e r v e b a la n c e
e ig h t days a f te r
f o r U .S . b r a n c h e s
t h e s e v e n - d a y p e r i o d b e g i n n i n g N o vem ber 8 ,
th e F e d e r a l R eserv e fo r
o ffic e
to m ain tain
The i n i t i a l r e s e r v e m a i n t e n a n c e p e r i o d
11,
to
th ese
§ 553(b)
w ith
a c tio n s
are
i m p r a c t i c a b l e and c o n t r a r y to
th e p u b lic
These a c t i o n s
are
ta k e n p u r s u a n t to th e B o a r d 's a u t h o r i t y
in te re st.
under
s e c tio n s
§§ 4 6 1 ,
25 a n d 2 5 ( a )
601 e t s e a . )
A c t o f 1978
19,
o f th e F e d e r a l R eserv e A ct
and u n d e r s e c t i o n
(1 2 U . S . C .
§ 3 105).
7 o f th e
(12 U . S . C .
I n t e r n a t i o n a l B an k in g
-1 4 -
E f f e c t i v e O c to b e r 6 ,
CFR § 2 0 4 . 5 )
is
§ 2 0 4 .5
am ended a s f o l l o w s :
19 o f
R eserve p e r c e n ta g e s .
of
th is
P u rsu a n t to
th e F e d e r a l R eserv e A c t,
B a n k i n g A c t o f 1978 a n d § 2 0 4 . 2 ( a )
(f)
s e c t i o n 2 0 4 . 5 o f R e g u l a t i o n D (12
RESERVE REQUIREMENTS
(a )
se c tio n
1979,
th e p r o v is io n s o f
s e c tio n 7 of
th e I n t e r n a t i o n a l
and s u b j e c t to p a r a g ra p h s
(b)
th ro u g h
s e c t i o n , -***
(b)
C u rre n c y and c o i n .
The U n i t e d S t a t e s c u r r e n c y an d c o i n
o f a member b a n k o r a U n i t e d S t a t e s b r a n c h o r a g e n c y o f a f o r e i g n b a n k
s h a l l be c o u n te d as r e s e r v e s
re q u ire m e n ts of t h i s
in d e te rm in in g co m p lian ce w ith
se c tio n .
*
(f )
*
*
*
*
M a rg in a l R eserv e R e q u ire m e n ts.
(1)
Member b a n k s .
D u rin g
p e r i o d b e g in n in g O c to b e r 25,
r e s e r v e m ain ten an c e p e r io d
m a in ta in a d a ily
d e p o sits
its
th e se v e n -d a y r e s e r v e m ain ten an c e
1979, and d u rin g
th e re a fte r,
a member b a n k s h a l l
t o t a l m anaged l i a b i l i t i e s
th e c o rre sp o n d in g
d u rin g
of
on a d a i l y
t o t a l m anaged l i a b i l i t i e s
p e rio d
th e sev e n to th e b e g in n in g
sev e n -d ay re s e r v e m ain ten an c e p e r io d
t h e member b a n k ' s m a n a g e d l i a b i l i t i e s
m em ber b a n k t h a t ,
tim e
th e am ount by w hich th e d a i l y
day c o m p u ta tio n p e r io d e n d in g e i g h t d ay s p r i o r
exceeds
each sev en -d ay
av erag e re s e rv e b alan c e a g a in s t i t s
eq u al to 8 per c e n t of
averag e of
of
th e re s e rv e
av erag e b a s i s ,
d u rin g
e n d in g S ep tem b er 2 6 , 1 9 7 9 ,
b a s e s h a l l be th e d a i l y
is
base.
For a
a n e t b o rro w er
th e fo u rte e n -d a y base
its
average o f i t s
m anaged l i a b i l i t i e s
t o t a l m anaged l i a b i l i t i e s
-1 5 -
d u rin g
t h e b a s e p e r i o d o r $100 m i l l i o n ,
F o r a member b a n k t h a t ,
on a d a i l y
average b a s is ,
l e n d e r o f t o t a l m anaged l i a b i l i t i e s
b a s e p e r i o d e n d in g S ep tem b er 2 5 ,
b a s e s h a l l b e t h e sum o f i t s
a n d $100 m i l l i o n .
th e
d u rin g
1979,
n e g a tiv e
its
is
a net
th e fo u rte e n -d a v
m anaged l i a b i l i t i e s
t o t a l m anaged l i a b i l i t i e s
A m em ber b a n k ' s m a n a g e d l i a b i l i t i e s
are
t o t a l o f th e fo llo w in g :
(i)(A )
t i m e d e p o s i t s o f $ 1 0 0 , 0 0 0 o r m o re w i t h o r i g i n a l
m a tu ritie s of le ss
th a n one y e a r;
(3)
t i m e d e p o s i t s o f $ 1 0 0 , 0 0 0 o r m o re w i t h o r i g i n a l
m a tu ritie s of le ss
in
w h ich ev er i s g r e a t e r .
th a n one y e a r r e p r e s e n tin g
th e fo rm o f p r o m i s s o r y n o t e s ,
due b i l l s ,
or sim ila r o b lig a tio n s
b o rro w in g s
ac k n o w led g em en ts o f a d v a n c e ,
as p ro v id ed
in § 2 0 4 .1 ( f ) ;
and
(C)
tim e d e p o s i t s w ith re m a in in g m a t u r i t i e s o f l e s s
th a n one y e a r r e p r e s e n t e d by i n e l i g i b l e
or o b lig a tio n s
sav in g s d e p o s its ,
c o n stitu te
a c cep tan c es
i s s u e d b y a member b a n k ' s a f f i l i a t e ,
p ro v id ed in § 2 0 4 .1 ( f ) .
in clu d e
b an k ers'
as
H ow ever, m anaged l i a b i l i t i e s
or
tim e d e p o s i t s ,
d e p o sits of in d iv id u a ls,
do n o t
open a c c o u n t t h a t
such as C h ristm a s c lu b
a c c o u n t s a n d v a c a t i o n c l u b a c c o u n t s t h a t a r e m ade u n d e r w r i t t e n
c o n tr a c ts p ro v id in g
a c e rta in
t h a t no w i t h d r a w a l s h a l l b e made u n t i l
n u m b er o f p e r i o d i c d e p o s i t s h a v e b e e n m ade d u r i n g
a p e rio d of n o t l e s s
th a n 3 m o n th s;
-16-
(ii)
any o b l i g a t i o n w ith an o r i g i n a l m a t u r i t y o f l a s s
th a n one y e a r
o b ta in in g
th a t is
funds
i s s u e d o r u n d e r ta k e n a s a m eans o f
to be u sed in
fo rm o f a p r o m i s s o r y n o t e ,
b ill,
in e lig ib le
b an k ers'
its
b an k in g b u s in e s s
in
th e
ac k n o w led g m en t o f a d v a n c e ,
due
a c c e p ta n c e ,
re p u rc h a se agreem ent
( e x c e p t on a U .S .
or agency s e c u r i t y ) , or s im ila r o b lig a tio n
(w ritte n or o ra l)
is s u e d t o and h e ld f o r
th e a c c o u n t o f a
d o m e s tic b a n k in g o f f i c e o r a g e n c y ^ -^ o f a n o th e r com m ercial
bank o r
t r u s t co m p a n y t h a t
p u rs u a n t to
th is
b u ild in g
s a v in g s and lo a n a s s o c i a t i o n ,
or
P a rt,
is n o t re q u ire d
a s a v in g s bank
to m a in ta in re s e rv e s
(m u tu al o r s t o c k ) , a
a c o o p e ra tiv e bank,
a c r e d i t u n io n , o r an agency o f th e U n ite d S t a t e s ,
th e E x p o rt-
I m p o r t B ank o f t h e U n i t e d S t a t e s , M i n b a n c C a p i t a l C o r p o r a t i o n
an d t h e G o v ern m en t D ev elo p m en t 3ank f o r P u e r t o R ic o ;
(iii)
any o b l i g a t i o n w ith an o r i g i n a l m a t u r i t y o f l e s s
th an one y ea r
o b ta in in g
th a t is
funds
i s s u e d o r u n d e r t a k e n a s a means o f
to be u sed in
form o f a r e p u r c h a s e
or o b lig a tio n s
to p r i n c i p a l and i n t e r e s t b y ,
agency th e re o f
b an k in g b u s in e s s
agreem ent a r is i n g
d ir e c t o b lig a tio n s o f,
as
its
th a t th e
in s titu tio n
o r a g e n c y o f a member b a n k ,
re q u ire d
to m a in ta in r e s e r v e s
fro m a t r a n s f e r o f
th a t are
fu lly
g u aran teed
t h e U n i t e d S t a t e s o r any
is
(e x c e p t re p u rc h a se ag reem en ts is s u e d
o ffic e
in th e
under
o b lig a te d
to re p u rch a se
to a d o m e s tic b an k in g
or o th e r o rg a n iz a tio n th a t
th is
p a r t p u rs u a n t to
is
th e
Any b a n k i n g o f f i c e o r a g e n c y i n a n y S t a t e o f t h e U n i t e d S t a t e s o r t h e
15/
r
i
D i s t c t o f C o lu m b ia o f a bank o r g a n iz e d u n d e r d o m e s tic o r f o r e i g n law .
-1 7 -
F ader a l R eserve A c t,— •
or
to a F e d e r a l R e se rv e 3ank—
) to
th e e x t e n t t h a t th e am ount o f su ch r e p u r c h a s e a g re e m e n ts
exceeds
th e t o t a l am ount o f U n ite d S t a t e s
h e l d b y t h e member b a n k i n
(iv )
any o b l i g a t i o n
its
tra d in g
th a t a rise s
a m em ber b a n k f r o m a d e a l e r
bank o r o th e r o r g a n iz a tio n
a c co u n t;
from a b o rr o w in g by
in s e c u r i t i e s
th a t is
and ag e n cy s e c u r i t i e s
th a t is
re q u ire d
n o t a member
to m a in ta in
reserv es
16/
p u rsu a n t to th is P a r t,—
fo r one b u s in e s s day, o f p ro c e e d s
o f a t r a n s f e r o f d e p o s i t c r e d i t i n a F e d e r a l R e s e r v e 3ar.k
(or o th e r
im m e d ia te ly a v a i l a b l e
d e a le r on th e d a te o f th e le a n
of s e c u ritie s
(v)
f u n d s ) , r e c e i v e d by s u c h
in c o n n e c tio n w ith c le a r a n c e
tra n sa c tio n s;
b o rr o w in g s w ith an o r i g i n a l m a t u r i t y o f l e s s
th an
o n e y e a r fro m f o r e i g n o f f i c e s o f o t h e r b a n k s and fro m i n s t i t u t i o n s
t h a t a r e ex em p t from i n t e r e s t
§ 2 1 7 .3 (g )
(v i)
o ffic e s
o f R e g u l a t i o n Q;
n e t b a l a n c e s d u e f r o m t h e member b a n k ’ s d o m e s t i c
to i t s
(v ii)
r a t e l i m i t a t i o n s p u rs u a n t to
fo re ig n bran ch es;
a sse ts
(in c lu d in g p a r tic ip a tio n s )
m em ber b a n k ' s f o r e i g n b r a n c h e s
m em ber b a n k ' s d o m e s t i c o f f i c e s ;
h e l d by t h e
t h a t w ere a c q u ir e d from th e
and
16/
E dge C o r p o r a t i o n s e n g a g e d i n b a n k i n g , A g r e e m e n t C o r p o r a t i o n s , o p e r a t i o n s
s u b s i d i a r i e s o f member b a n k s , a n d U . S . b r a n c h e s a n d a g e n c i e s o f f o r e i g n b a n k s
w i t h w o r l d w i d e b a n k i n g a s s e t s i n e x c e s s o f $1 b i l l i o n .
1 7 / R ep u rc h ase a g reem en ts e n te r e d in t o w ith nonexem pt e n t i t i e s , such
a s nonm em ber b a n k s a n d n o n b a n k d e a l e r s , a r e n o t s u b j e c t t o m a r g i n a l
r e s e r v e re q u ir e m e n ts i f such ag re e m e n ts a r e in te n d e d to p ro v id e c o l l a t e r a l
to such nonexem pt e n t i t i e s in o rd e r to engage in re p u rc h a s e t r a n s a c t i o n s
w i t h t h e F e d e r a l R e s e r v e S y s t e m Open M a r k e t A c c o u n t .
-1 3 -
(v iii)
c r e d i t o u tsta n d in g
13/
re sid e n ts-^ -
to U .S .
(o th er
b a l a n c e s d u e fro m i t s
from i t s
th an a s s e t s
fo re ig n b ran ch es
a c q u ir e d and n e t
d o m estic o f f i c e s ) . P ro v id e d , T h a t t h i s
p a ra g ra p h does n o t a p p ly to c r e d i t e x ten d e d
am ount o f $ 1 0 0 ,0 0 0 o r l e s s
(2)
(1)
in
t o any U n ite d S t a t e s
re sid e n t,
by a f o r e i g n b r a n c h w h ich a t no tim e d u r i n g
p e rio d had c r e d i t o u tsta n d in g
e x c e e d i n g $1 m i l l i o n ,
i n t o b e f o r e May 1 7 ,
(3)
to U n ite d S ta t e s
th e a g g re g a te
th e co m p u tatio n
re sid e n ts
u n d e r b i n d i n g co m m itm e n ts e n t e r e d
1973, o r
(4)
to an i n s t i t u t i o n
th a t w ill
b e m a i n t a i n i n g r e s e r v e s on s u c h c r e d i t u n d e r p a r a g r a p h s
or
(f)
of
th is
(c)
s e c t i o n o r u n d e r R e g u l a t i o n R.
P r o v i d e d , h o w e v e r, T h a t in no e v e n t s h a l l
t h e r e s e r v e s r e q u i r e d o n a member
b a n k ' s a g g r e g a t e t i m e a n d s a v i n g s d e p o s i t s b e m o re t h a n 10 p e r c e n t .
(2)
D u rin g
U n i t e d S t a t e s b r a n c h e s and a g e n c i e s o f
fo re ig n banks.
th e sev e n -d ay re s e r v e m ain ten an c e p e r io d b eg in n in g
November 3 ,
1979,
a U n ited S ta t e s b ran ch o r agency o f a fo r e ig n
bank w ith w o rld w id e b an k in g a s s e t s
s h a l l m a in ta in
lia b ilitie s
a d a ily
i n e x c e s s o f $1 b i l l i o n
average re s e rv e b a la n c e a g a in s t i t s
e q u a l t o 8 p e r c e n t o f th e am ount by w hich th e
d a ily
av erag e o f i t s
th re e
se v e n -d a y c o m p u ta tio n p e r io d s b e g in n in g O c to b e r 11,
18 a n d 2 5 ,
t o t a l m anaged l i a b i l i t i e s
1979, exceeds
th e
to ta l of
th e
d u rin g
th e
i n s t it u t i o n 's
m anaged
18/
(a )
Any i n d i v i d u a l r e s i d i n g ( a t t h e t i m e t h e c r e d i t i s e x t e n d e d )
i n a n y S t a t e o f t h e U n i t e d S t a t e s o r t h e D i s t r i c t o f C o l u m b i a ; (b) a n y
c o r p o r a tio n , p a r tn e r s h i p , a s s o c ia ti o n or o th e r e n t i t y o rg a n iz e d th e r e in
( " d o m e s t i c c o r p o r a t i o n " ) ; a n d (c ) a n y b r a n c h o r o f f i c e l o c a t e d t h e r e i n o f
any o th e r e n t i t y w h erev er o rg a n iz e d .
C r e d it ex ten d e d to a f o r e ig n b ra n c h ,
o f f ic e , s u b s id ia ry , a f f i l i a t e or o th e r fo re ig n e sta b lish m e n t (" fo re ig n a f f i l i a t e " )
c o n t r o l l e d by o n e o r m o re s u c h d o m e s t i c c o r p o r a t i o n s w i l l n o t b e dee m e d t o be
c r e d i t e x te n d e d to a U n ite d S t a t e s r e s i d e n t i f th e p r o c e e d s w i l l be u sed in i t s
f o r e ig n b u s in e s s o r t h a t o f o th e r f o r e ig n a f f i l i a t e s o f th e c o n t r o l l i n g
d o m estic c o r p o r a t i o n ( s ) .
■ k IB B H I
-1 9 -
lia b ilitie s
base.
D u rin g th e s e v e n -d a y r e s e r v e m a in te n a n c e
p e r i o d b e g i n n i n g N o vem ber 1 5 ,
1979,
and d u rin g ea ch s e v e n -
day r e s e r v e m a in te n a n c e p e r io d t h e r e a f t e r ,
a U n ited S ta t e s
b ra n c h o r agency o f a f o r e i g n bank w ith w o rld w id e b a n k in g
a s s e ts
i n e x c e s s o f $1 b i l l i o n
re s e rv e b alan c e a g a in s t i t s
of
s h a ll m a in ta in a d a ily
lia b ilitie s
th e am ount by w h ich th e d a i l y
lia b ilitie s
d u rin g
e ig h t days p r io r
av erag e
equal to 8 per c e n t
av erag e o f i t s
t o t a l m anaged
th e se v e n -d a y c o m p u ta tio n p e r io d e n d in g
to th e b e g in n in g o f th e c o rre s p o n d in g
day r e s e r v e m a in te n a n c e p e r io d e x c e e d s th e
m anaged l i a b i l i t i e s
base.
seven-
i n s t it u t i o n 's
I n d e t e r m in i n g m anaged l i a b i l i t i e s
o f U n ite d S t a t e s b ra n c h e s and a g e n c i e s ,
th e m anaged l i a b i l i t i e s
o f a l l U n i t e d S t a t e s b r a n c h e s a n d a g e n c i e s o f t h e sam e f o r e i g n
p a r e n t bank and o f
c e n t)
i t s m a jo rity -o w n e d
f o r e i g n b an k in g s u b s i d i a r i e s
co n so lid a te d .
in tra -fa m ily
ag e n cies of
A s s e t and l i a b i l i t y
(g re a te r
(th e
t h a n 50 p e r
"fam ily ")
s h a l l be
am o u n ts t h a t r e p r e s e n t
t r a n s a c t i o n s b etw e en U n ite d S t a t e s b ra n c h e s and
t h e sam e f a m i l y s h a l l n o t b e i n c l u d e d i n c o m p u t i n g
th e m anaged l i a b i l i t i e s
of
th e fa m ily .
U n ited S ta te s b ra n ch es
a n d a g e n c i e s o f t h e sam e f a m i l y s h a l l d e s i g n a t e o n e U . S . o f f i c e
to be th e r e p o r tin g
fa m ily r e p o r ts
o f f ic e fo r p u rp o ses of f i l i n g
re q u ir e d fo r d e te r m in a tio n o f th e f a m i l y 's
m arg in a l re s e rv e
re q u ire m e n ts.
The r e p o r t i n g o f f i c e
file
r e p o r t s and m a in ta in m a rg in a l r e s e r v e s
th is
se c tio n
th e d i s t r i c t
c o n so lid a te d
for
sh a ll
re q u ire d under
th e fa m ily a t th e F e d e r a l R e se rv e 3ank o f
i n w h ich t h e r e p o r t i n g
o ffic e
is
lo c a te d .
For
-2 0 -
a fa m ily o f U n ite d S t a t e s b ra n c h e s and a g e n c ie s
d a ily
averag e b a s is ,
d u rin g
is
th a t,
a n e t b o rr o w e r o f t o t a l m anaged l i a b i l i t i e s
th e f o u r te e n - d a v b a s e p e r i o d e n d in g S ep tem b er 25,
t h e m anaged l i a b i l i t i e s
base fo r
averag e of
t o t a l m anaged l i a b i l i t i e s
th e f a m i l y 's
b a s e p e r i o d o r $100 m i l l i o n ,
av erag e b a s is ,
is
f a m ily 's n e g a tiv e
(i)(A )
base
fo r
(B)
t h e f a m i l y s h a l l b e t h e sum o f t h e
o f a fa m ily a re th e
a n d $100 m i l l i o n .
th an one y e a r;
th an one y e a r
th e form o f p r o m is s o r y n o t e s ,
or s im ila r o b lig a tio n s
(C)
th a n one y e a r
(D)
re p re se n tin g
as p ro v id ed in § 2 0 4 .1 ( f ) ;
o b l i g a t i o n s w ith re m a in in g m a t u r i t i e s o f l e s s
b an k ers'
H ow ever, m anaged l i a b i l i t i e s
tim e d e p o s i t s ,
a c co u n ts
a c cep tan c es.
c r e d i t b a l a n c e s o f $ 1 0 0 , 0 0 0 o r m o re w i t h a n
o r i g i n a l m a t u r i t y o f 30 d a y s o r m o re b u t l e s s
in d iv id u a ls,
b o rro w in g s
ack n o w led g em en ts o f a d v a n c e ,
r e p r e s e n t e d by i n e l i g i b l e
The t o t a l
t o t a l o f ea ch b r a n c h 's and a g e n c y 's
t i m e d e p o s i t s o f $ 1 0 0 , 0 0 0 o r m o re w i t h o r i g i n a l
m a tu ritie s of le ss
due b i l l s ,
1979,
t i m e d e p o s i t s o f $ 1 0 0 , 0 0 0 o r m o re w i t h o r i g i n a l
m a tu ritie s of le ss
c lu b
on a d a i l y
t o t a l m anaged l i a b i l i t i e s
t o t a l m anaged l i a b i l i t i e s
m anaged l i a b i l i t i e s
or
th a t,
th e
For a
th e f o u r te e n - d a y b a s e p e r i o d e n d in g S ep tem b er 26,
t h e m anaged l i a b i l i t i e s
in
d u rin g
w h ich ev er i s g r e a t e r .
a n e t le n d e r of
1979,
th e fa m ily s h a l l be th e d a i l y
fa m ily o f U n ite d S t a t e s b ra n c h e s and a g e n c ie s
d u rin g
on a
th a n one y e a r .
do n o t i n c l u d e s a v i n g s d e p o s i t s ,
open acco u n t t h a t c o n s t i t u t e
d ep o sits of
such as C h ris tm a s c lu b a c c o u n ts and v a c a tio n
t h a t a r e made u n d e r w r i t t e n
c o n tr a c ts p ro v id in g
-2 1 -
t h a t n o w i t h d r a w a l s h a l l b e m ade u n t i l a c e r t a i n
num ber o f
p e r i o d i c d e p o s i t s h a v e b e e n m ade d u r i n g a p e r i o d o f n o t l e s s
t h a n 3 m o n th s;
(ii)
any o b l i g a t i o n w ith an o r i g i n a l m a t u r i t y o f l e s s
th a n one y e a r
o b ta in in g
th a t is
i s s u e d o r u n d e r ta k e n a s a m eans o f
fu n d s to be used in
form o f a p r o m is s o r y n o t e ,
b ill,
in e lig ib le
ban k ers'
its
b an k in g b u s in e s s
a c k n o w led g m en t o f a d v a n c e ,
a c cep tan c e,
re p u rch a se
( e x c e p t on a U .S . o r a g e n c y s e c u r i t y ) , o r
(w ritte n or o ra l)
in th e
is s u e d t o and h e ld f o r
due
agreem ent
sim ila r o b lig a tio n
th e ac c o u n t o f a
d o m e s tic b an k in g o f f i c e o r a g e n c y ^ ^ o f a n o th e r com m ercial
£■ Zr
bank o r
t r u s t com p an y t h a t i s n o t r e q u i r e d
p u rsu a n t to
b u ild in g
th is P a rt,
a s a v in g s bank
(m u tu al o r s t o c k ) , a
c r s a v in g s and lo a n a s s o c i a t i o n ,
a c r e d i t u n io n ,
I m p o r t B ank o f
to m a in ta in re s e rv e s
a c o o p e ra tiv e bank,
o r an ag e n cy o f th e U n ite d S t a t e s ,
th e E x p o rt-
th e U n i t e d S t a t e s , M inbanc C a p i t a l C o r p o r a t i o n
a n d t h e G overnm ent D e v elo p m e n t 3ank f o r P u e r t o R ic o ;
(iii)
any o b l i g a t i o n w ith an o r i g i n a l m a t u r i t y o f l e s s
th a n one y e a r t h a t i s
o b ta in in g
i s s u e d o r u n d e r t a k e n a s a means o f
fu n d s to be u sed in i t s
b an k in g b u s in e s s
form o f a r e p u r c h a s e a g re e m e n t a r i s i n g
d ir e c t o b lig a tio n s o f,
or o b lig a tio n s
in
th e
from a t r a n s f e r
th a t are f u lly
of
g u a ran teed
1 5 / Any b a n k i n g o f f i c e o r a g e n c y i n a n y S t a t e o f t h e U n i t e d S t a t e s
o r th e D i s t r i c t o f C olu m b ia o f a bank o r g a n i z e d u n d e r d o m e s tic o r f o r e i g n
law .
-2 2 -
as
to p r i n c i p a l and i n t e r e s t b v ,
agency th e re o f
t h a t th e
th e U n i t e d S t a t e s o r any
in stitu tio n
is
o b lig a te d
to re p u rch a se
( e x c e p t r e p u r c h a s e a g re e m e n ts i s s u e d t o a d o m e s tic b an k in g
o f f i c e o r a g e n c y o f a member b a n k ,
re q u ire d
to m a in ta in r e s e r v e s under
or o th e r o rg a n iz a tio n th a t is
th is
P a rt p u rsu a n t to
F e d e ra l R eserve A c t,— ^ o r to a F e d e ra l R eserve B a n lc ^ /
th e
to
th e e x t a n t t h a t th e am ount o f su ch r e p u r c h a s e a g re e m e n ts
exceeds
th e
t o t a l am ount o f U n ite d S t a t e s
h e l d by th e i n s t i t u t i o n
(iv )
any o b l i g a t i o n
a d e a le r
in s e c u r i t i e s
o rg a n iz a tio n
to
in
th a t is
its
tra d in g
th a t a rise s
th a t is
re q u ire d
and agency s e c u r i t i e s
ac co u n t;
fro m a b o rr o w in g from
n o t a m em ber b a n k o r o t h e r
to m a in ta in re s e rv e s p u rs u a n t
16/
t h i s P a r t , — ' fo r one b u s in e s s d ay , o f p ro c e e d s o f a t r a n s f e r
of d e p o sit c r e d it
a v a ila b le
lo an
i n a F e d e r a l R e s e r v e B ank
(o r o t h e r
f u n d s ) , r e c e i v e d by s u c h d e a l e r on t h e d a t e o f th e
in c o n n e c tio n w ith c le a r a n c e o f s e c u r i t i e s
(v)
im m e d ia te ly
tra n sa c tio n s;
b o r r o w in g s w ith an o r i g i n a l m a t u r i t y o f l e s s
th an
o n e y e a r fro m f o r e i g n o f f i c e s o f o t h e r b a n k s and from i n s t i t u t i o n s
th a t
a r e ex e m p t fro m i n t e r e s t r a t e
§ 2 1 7 .3 (g )
(v i)
p u rs u a n t to
o f R e g u l a t i o n Q;
a sse ts
(in c lu d in g p a r tic ip a tio n s )
f o r e i g n p a r e n t bank
o u tsid e
lim ita tio n s
h e l d by t h e
( i n c l u d i n g b r a n c h e s and a g e n c i e s l o c a t e d
th e S ta t e s o f
th e U n ite d S ta t e s
and th e D i s t r i c t o f
15/
Edge C o r p o r a t i o n s en g ag ed in b a n k in g , A greem ent C o r p o r a t i o n s , o p e r a t i o n s
s u b s i d i a r i e s o f member b a n k s , a n d U . S . b r a n c h e s a n d a g e n c i e s o f f o r e i g n b a n k s
w ith w o rld w id e b a n k in g a s s e t s in e x c e s s o f S I b i l l i o n .
17/
R ep u rc h ase a g re e m e n ts e n te r e d i n t o w ith nonexem pt e n t i t i e s , such
a s ncn m em b e r b a n k s a n d n o n b a n k d e a l e r s , a r e n o t s u b j e c t t o m a r g i n a l
r e s e r v e r e q u ir e m e n ts i f such ag reem en ts a re in te n d e d to p ro v id e c o l l a t e r a l
t o such nonexem pt e n t i t i e s in o rd e r to engage in re p u rc h a s e t r a n s a c t i o n s
w i t h t h e F e d e r a l R e s e r v e S y s t e m O pen M a r k e t A c c o u n t .
-2 2 -
C o lu m b ia)
and by t h e f o r e i g n p a r e n t ' s m a j o r i t y - o w n e d
t h a n 50 p e r c e n t )
fo reig n s u b s id ia rie s
and a g e n c ie s l o c a t e d o u t s i d e
(in c lu d in g b ran ch es
th e S ta t e s o f
and t h e D i s t r i c t o f C o lu m b ia)
th e U n ited S ta te s
o r p a r e n t h o l d i n g co m p a n y t h a t
w ere a c q u i r e d from t h e U .S . b ra n c h o r a g e n c y
a sse ts
re q u ire d
(g re a te r
(o th er
th an
t o be s o l d b y t h e F e d e r a l s u p e r v i s o r y a u t h o r i t y
o f t h e b ra n c h o r a g e n c y ) ; and
(v ii)
bank
n e t b a la n c e s due t o th e
(in clu d in g
f a m i l y 's
b ra n c h e s and a g e n c i e s l o c a t e d o u t s i d e
S ta t e s o f th e U n ited S ta t e s
f o r e i g n b an k in g s u b s i d i a r i e s
and a g e n c ie s lo c a t e d o u t s i d e
o r p a r e n t h o ld in g com pany,
to ta l
a sse ts
item s in th e p ro c e s s o f c o l l e c t i o n ,
fro m th e f o r e i g n p a r e n t bank
lo c a te d o u tsid e
t h a n 50 p e r c e n t )
lo c a te d o u tsid e
(n o t in c lu d in g c a sh ,
o r b a l a n c e s due
th e U n ited S ta t e s
and th e
th e p a r e n t 's m ajo rity -o w n e d
su b s id ia rie s
(g re a te r
( in c l u d i n g b ra n c h e s and a g e n c ie s
th e S ta t e s o f th e U n ited S ta t e s
D i s t r i c t o f C olum bia)
th e U .S .
( i n c l u d i n g b r a n c h e s and a g e n c i e s
th e S ta t e s o f
D i s t r i c t o f C o lu m b ia ),
th a n
(in c lu d in g b ran ch es
d e d u c ti n g an am ount e q u a l t o 8 p e r c e n t o f
b ra n c h and ag e n c y f a m i l y 's
cash
(g re a te r
th e S ta t e s o f th e U n ite d S ta t e s
and t h e D i s t r i c t o f C o lu m b ia)
a fte r
th e
and t h e D i s t r i c t o f C o lu m b ia)
and t o th e f o r e i g n p a r e n t ' s m a jo rity -o w n e d
50 p e r c e n t )
fo re ig n p a re n t
and th e
o r p a r e n t h o ld in g com pany, and b a la n c e s
d u e from u n r e l a t e d b a n k s ) .
Any e x c e s s o r d e f i c i e n c y
th is
in th e m a rg in a l r e s e r v e b a la n c e s
p a r a g r a p h s h a l l be s u b j e c t t o § 2 0 4 . 3 o f
th is P a rt.
re q u ire d under
-2 4 -
By o r d e r o f
S y s te n , O c to b e r 6,
th e B oard o f G o v e rn o rs o f th e F e d e r a l R e s e rv e
1979.
(S ig n ed )
T h e o d o re E. A l l i s o n
T h e o d o r e E. A l l i s o n
S e c r e t a r y o f th e B oard
[SEAL]
@FedFRASER