Full text of Federal Reserve Notes : July 1985

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Federal Re/erve flote/
Federal Re/erve Bank of /an Franci/co

July 1985

/erving flla/ka, Arizona, California, Hawaii, Idaho, Nevada, Oregon, Utah, & UJa/hington

POLICY DEVELOPMENTS
Discount Rate

On May 21, 1985, the basic discount rate was lowered from 8 percent to IVi percent. This rate applies

Lowered to 714%

to short-term and seasonal advances. For further information about the San Francisco Reserve
Bank's rates of interest, call the Credit Unit at (415) 974-2265.

Reducing Risk in
Large-Dollar Wire
Transfer Systems

On May 24, 1985, the Federal Reserve Board issued a statement of its policy, to take effect March
27, 1986, to control and reduce the risks to depository institutions participating in large-dollar wire

transfer systems. The policy calls on private networks and depository institutions to reduce their
own credit risks. It also depends, in part, on the role of the Federal Reserve and other financial insti
tution regulators in examining, monitoring, and counseling institutions.

The Board encourages each depository institution that incurs daylight overdrafts on Fedwire or that
participates on private large-dollar wire networks to adopt voluntarily, by December 31, 1985, a
cross-system sender net debit cap (a sender net debit cap that applies across all wire transfer systems
as a total) following the guidelines that the Board established.
The Board's policy also states that no large-dollar payment network will be eligible for Federal Reserve
net settlement services unless it:

1) requires each participant to establish a maximum net amount it is willing to receive from any
sender (bilateral net credit limit);

2)

establishes a maximum ceiling on the amount of intra-day credit a sender may incur (sender net
debit cap) reasonably designed to reduce the risks to participants on that network;

3)

develops and implements a system that will reject or hold any payment that would exceed either
bilateral net credit limits or the network's sender net debit cap; and

4)

agree to provide transactions data to its Reserve Bank on request.

Copies of the Board's statement are available from Corporate Services at (415) 974-2752. For further
information, please call Sharon Reisdorf in Accounting at (415) 974-2688.
Federal Reserve
ACH Service

The San Francisco Reserve Bank issued a statement to depository institutions in the San Francisco

zone clarifying several issues related to ACH service and the Federal Reserve's role as an ACH pro
vider. The key points of that statement follow:

1)
2)

Membership —A depository institution need not belong to an association to participate in ACH.
Receipt of Items - If an institution elects to join an ACH Association and use its processor, the
institution will receive items from both that ACH and the Federal Reserve's ACH (those items

originated by all other originators nationally). Alternatively, the institution may request the Federal
Reserve to send all items destined for that institution to the private sector processor for con

solidation. In that case, the private ACH fees would be added to those of the Fed for all items
(except those being exchanged between Association members, both of whom have elected to
use the Association's processor).

3)

4)

Pricing —The Federal Reserve Banks establish prices for services annually, effective the beginning
of each year. In addition, the Reserve Banks can analyze and compare the cost to a depository
institution of using the Federal Reserve ACH services versus an alternative.
Future of Federal Reserve ACH - The Federal Reserve has been providing ACH services to

depository institutions for the past 17 years and remains committed to enhancing and expanding
the services as technological advances are made and needs are expressed.

For further information, please call John Hoover in District Financial Services at (415) 974-2120.

REGULATIONS AND OPERATIONS UPDATE
Calendar Month

Billing Cycle

Effective August 1, 1985, the Federal Reserve Bank of San Francisco will begin a new billing cycle
based on the calendar month. The revised billing cycle will end on the last business day of each
calendar month. The current billing cycle is based on a reserve week cycle and consistsof eitherfour
or five weeks. For further information, please contact:

Check Collection
Fees Reduced

Rick Miller

San Francisco

Earl Hartzler

Los Angeles

Cheryl Bassett

Portland

Chris Matesen

Salt Lake City

Bruce Lyman

Seattle

(415)
(213)
(503)
(801)
(206)

974-2697
683-8500
294-3854
322-7867
442-0797

On June 27, 1985, mid-year reductions in check collection fees for interterritory depositors at a
number of Federal Reserve offices took effect. Some deposit deadlines also changed on July 1, 1985.
For the Twelfth District, the following changes were made:

• All interterritory and fine sort cash letter fees were reduced by one dollar for all five offices
• Fine sort item fees for City endpoints at our Portland, Salt Lake City, and Seattle offices have
been reduced from 0.8 cents to 0.6 cents

• To improve availability, the City fine sort deposit deadlines at our San Francisco and Los Angeles
offices have been moved from 9 a.m. to 10 a.m.

For more information, please contact the Payments Services officer in the Federal Reserve office
serving your institution.
Cash Transportation
Prices Revised

Armored carrier agreements for the San Francisco zone provide for a price increase in the second year.
As a result, new cash transportation fees took effect June 27, 1985. For further information, please
contact John Wong, Cash Services, at (415) 974-2449.

FOR PUBLIC COMMENT

Large-Dollar Wire
Transfer Systems

In addition to issuing its statement regarding the reduction and control of risk arising from largedollar wire transfer systems, the Federal Reserve Board requested comment on three items:
Comment by August 15, 1985:

• the treatment of Fedwire overdrafts resulting from transfer of book-entry securities (Docket
R-0515A)

Comment by September 30, 1985:

• automated clearing house issues (Docket R-0515B)
•

net settlement issues (Docket R-0515C)

Copies of the Board's requests for comment are available from Corporate Services at (415) 974-2752.
For further information, please contact Sharon Reisdorf in Accounting at (415) 974-2688.
Nominations to

The Federal Reserve Board is requesting nominations for eleven appointments to its Consumer

Consumer Advisory

Advisory Council by August 9, 1985. The qualified individuals will replace members whose terms

Council

expire on December 31, 1985.

The Consumer Advisory Council was established by Congress in 1976 to advise the Board on the
exercise of its duties under the Consumer Credit Protection Act and on other consumer-related
matters. The Council meets three times each year.

Nominations should be submitted in writing to Dolores S. Smith, Assistant Director, Division of
Consumer and Community Affairs, Board of Governors of the Federal Reserve System, Washington,

D.C. 20551. They should include the name, address, and telephone number of the nominee. In
addition, information on the nominee's pastand present positions held, special knowledge, interests

or experience related to consumer credit or other consumer financial services should be included.