View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

F

D'C L

.

ed eral

R

eser ve

Ml ȣli
"

B

an k

of

S t. L o u is

P. O BO X 4 4 2

St.

Louis

6 6 , M issou ri

u

...
*Ur

lL l.L U H O

N o v e m b e r 30,

1959

R E SE R V E S O F M E M B E R BANKS

T o M e m b e r B a n k s in the
E ig h th F e d e r a l R e s e r v e D i s t r i c t :
F o r y o u r in f o r m a t i o n , t h e r e i s q u o te d b e l o w th e t e x t o f a s t a t e m e n t
r e l e a s e d to th e p r e s s to d a y b y th e B o a r d o f G o v e r n o r s o f the F e d e r a l
R e s e r v e S y s t e m r e g a r d i n g a m e n d m e n t to R e g u l a t i o n D - R e s e r v e s o f
M e m b e r B a n k s:




" T h e B o a r d o f G o v e r n o r s o f th e F e d e r a l R e s e r v e S y s t e m
to d a y a m e n d e d i t s R e g u l a t i o n D s o th at m e m b e r b a n k s
h a v in g l a r g e h o ld in g s o f v a u lt c a s h in r e l a t i o n to t h e ir
d e p o s i t s w i l l be p e r m i t t e d to c o u n t a p a r t o f t h is c a s h
in m e e t i n g t h e i r r e s e r v e r e q u i r e m e n t s .
" E f f e c t i v e D e c e m b e r 1, 1 9 5 9 , s o - c a l l e d " C o u n tr y " b a n k s
(that i s , b a n k s n o t c l a s s i f i e d a s r e s e r v e c i t y o r c e n t r a l
r e s e r v e c i t y b a n k s ) h a v in g v a u lt c a s h in e x c e s s o f 4 p e r
c e n t o f t h e ir n e t d e m a n d d e p o s i t s w i l l be p e r m i t t e d to
c o u n t the e x c e s s a s p a r t o f t h e i r r e q u i r e d r e s e r v e s .
A l s o , e f f e c t i v e D e c e m b e r 3, b a n k s c l a s s i f i e d a s r e s e r v e
c i t y and c e n t r a l r e s e r v e c i t y b a n k s w i l l s i m i l a r l y be
p e r m i t t e d to c o u n t v a u lt c a s h in e x c e s s o f 2 p e r c e n t of
t h e ir n e t d e m a n d d e p o s i t s .
"On th e b a s i s o f a v e r a g e v a u lt c a s h h o ld in g s fo r the p a s t
12 m o n t h s , it a p p e a r s th a t a l m o s t h a lf o f the 6Z50 m e m b e r
b a n k s w i l l b e in a p o s i t i o n to c o u n t a p a r t o f t h e i r v a u lt
c a s h in m e e t i n g t h e i r r e q u i r e d r e s e r v e s . A s a r e s u l t ,
to t a l m e m b e r b a n k r e s e r v e b a l a n c e s at th e F e d e r a l
R e s e r v e B a n k s m a y be l o w e r th an w o u ld o t h e r w i s e be
r e q u i r e d b y a s m u c h a s $ 2 3 0 m i l l i o n , of w h ic h $ 1 6 0
m i l l i o n w o u ld be a t c o u n t r y b a n k s and $ 7 0 m i l l i o n at
r e s e r v e c i t y b a n k s . T o t a l v a u lt c a s h h e ld b y m e m b e r
banks has a v e r a g e d about $2. 2 b illio n .

(o v e r)

" T h is F e d e r a l R e s e r v e a c t io n w a s ta k en u n d e r th e t e r m s
o f an A c t o f C o n g r e s s in 1959 d e s i g n e d in p a r t to r e m e d y
i n e q u i t i e s th at h a v e a r i s e n b e c a u s e m a n y b a n k s , p a r t i ­
c u l a r l y s m a l l c o u n t r y b a n k s , find it n e c e s s a r y fo r
o p e r a t in g p u r p o s e s to h o ld r e l a t i v e l y l a r g e r a m o u n t s o f
v a u lt c a s h than o th e r b a n k s do. N o c h a n g e in th e S y s t e m ' s
g e n e r a l m o n e t a r y or c r e d i t p o l i c y i s i n v o l v e d . T h e
b e g in n in g of D e c e m b e r i s a l o g i c a l t i m e f o r t h is a c t io n
i n a s m u c h a s th e F e d e r a l R e s e r v e S y s t e m n e e d s to m a k e
a d d it io n a l r e s e r v e s a v a i l a b l e to the b a n k in g s y s t e m e a c h
y e a r at t h is s e a s o n in o r d e r to m e e t the s e a s o n a l r e q u i r e ­
m e n t s o f th e e c o n o m y .
"At th e s a m e t i m e , the B o a r d a d o p te d s e v e r a l a m e n d m e n t s
to t e c h n i c a l p r o v i s i o n s o f R e g u la t io n D, in c lu d in g an
a m e n d m e n t ( e f f e c t i v e D e c e m b e r 31, 1959) w h e r e b y the
r e s e r v e c o m p u t a t io n p e r i o d fo r c o u n t r y b a n k s w i l l be
b i w e e k l y i n s t e a d of s e m i m o n t h l y . "
R e v i s e d R e g u la t io n D w i l l be p r in t e d and s e n t to y o u at a l a t e r
date.




D e l o s C. J o h n s
P r e sid en t


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102