[Federal Register Volume 84, Number 227 (Monday, November 25, 2019)]
[Rules and Regulations]
[Pages 64705-64707]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-25428]
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FEDERAL RESERVE SYSTEM
12 CFR Part 204
[Regulation D; Docket No. R-1686]
RIN 7100-AF 66
Reserve Requirements of Depository Institutions
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Final rule.
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SUMMARY: The Board is amending Regulation D, Reserve Requirements of
Depository Institutions, to reflect the annual indexing of the reserve
requirement exemption amount and the low reserve tranche for 2020. The
Regulation D amendments set the amount of total reservable liabilities
of each depository institution that is subject to a zero percent
reserve requirement in 2020 at $16.9 million (up from 16.3 million in
2019). This amount is known as the reserve requirement exemption
amount. The Regulation D amendments also set the amount of net
transaction accounts at each depository institution (over the reserve
requirement exemption amount) that is subject to a three percent
reserve requirement in 2020 at $127.5 million (up from $124.2 million
in 2019). This amount is known as the low reserve tranche. The
adjustments to both of these amounts are derived using statutory
formulas specified in the Federal Reserve Act. The Board is also
announcing changes in two other amounts, the nonexempt deposit cutoff
level and the reduced reporting limit, that are used to determine the
frequency at which depository institutions must submit deposit reports.
DATES:
Effective date: December 26, 2019.
Compliance dates: The new low reserve tranche and reserve
requirement exemption amount will apply to the fourteen-day reserve
maintenance period that begins January 16, 2020. For depository
institutions that report deposit data weekly, this maintenance period
corresponds to the fourteen-day computation period that begins December
17, 2019. For depository institutions that report deposit data
quarterly, this maintenance period corresponds to the seven-day
computation period that begins December 17, 2019. The new values of the
nonexempt deposit cutoff level, the reserve requirement exemption
amount, and the reduced reporting limit will be used to determine the
frequency at which a depository institution submits deposit reports
effective in either June or September 2020.
FOR FURTHER INFORMATION CONTACT: Sophia H. Allison, Senior Special
Counsel (202-452-3565), Legal Division, or Francis A. Martinez, Senior
Financial Institution and Policy Analyst (202-245-4217), Division of
Monetary Affairs; for users of Telecommunications Device for the Deaf
(TDD) only, contact (202/263-4869); Board of Governors of the Federal
Reserve System, 20th and C Streets NW, Washington, DC 20551.
SUPPLEMENTARY INFORMATION: Section 19(b)(2) of the Federal Reserve Act
(12 U.S.C. 461(b)(2)) requires each depository institution to maintain
reserves against its transaction accounts and nonpersonal time
deposits, as prescribed by Board regulations, for the purpose of
implementing monetary policy. Section 11(a)(2) of the Federal Reserve
Act (12 U.S.C. 248(a)(2)) authorizes the Board to require reports of
liabilities and assets from depository institutions to enable the Board
to conduct monetary policy. The Board's actions with respect to each of
these provisions are discussed in turn below.
I. Reserve Requirements
Pursuant to section 19(b) of the Federal Reserve Act (Act),
transaction account balances maintained at each depository institution
are subject to reserve requirement ratios of zero, three, or ten
percent. Section 19(b)(11)(A) of the Act (12 U.S.C. 461(b)(11)(A))
provides that a zero percent reserve requirement shall apply at each
depository institution to total reservable liabilities that do not
exceed a certain amount, known as the reserve requirement exemption
amount. Section 19(b)(11)(B) provides that, before December 31 of each
year, the Board shall issue a regulation adjusting the reserve
requirement exemption amount for the next calendar year if total
reservable liabilities held at all depository institutions increase
from one year to the next. No adjustment is made to the reserve
requirement exemption amount if total reservable liabilities held at
all depository institutions should decrease during the applicable time
period. The Act requires the percentage increase in the reserve
requirement exemption amount to be 80 percent of the increase in total
reservable liabilities of all depository institutions over the one-year
period that ends on the June 30 prior to the adjustment.
Total reservable liabilities of all depository institutions
increased by 4.3 percent, from $8,042 billion to $8,387 billion,
between June 30, 2018, and June 30, 2019. Accordingly, the Board is
amending Regulation D to set the reserve requirement exemption amount
for 2020 at $16.9 million, an increase of $0.6 million from its level
in 2019.\1\
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\1\ Consistent with Board practice, the low reserve tranche and
reserve requirement exemption amounts have been rounded to the
nearest $0.1 million.
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Pursuant to Section 19(b)(2) of the Act (12 U.S.C. 461(b)(2)),
transaction account balances maintained at each depository institution
over the reserve requirement exemption amount and up to a certain
amount, known as the low reserve tranche, are subject to a three
percent reserve requirement. Transaction account balances over the low
reserve tranche are subject to a ten percent reserve requirement.
Section 19(b)(2) also provides that, before December 31 of each year,
the Board shall issue a regulation adjusting the low reserve tranche
for the next calendar year. The Act requires the adjustment in the low
reserve tranche to be 80 percent of the percentage increase or decrease
in total transaction accounts of all depository institutions over the
one-year period that ends on the June 30 prior to the adjustment.
Net transaction accounts of all depository institutions increased
3.4 percent, from $2,410 billion to $2,491 billion, between June 30,
2018, and June 30, 2019. Accordingly, the Board is amending Regulation
D to set the low reserve tranche for net transaction accounts for 2020
at $127.5 million, an increase of $3.3 million from 2019.
The new low reserve tranche and reserve requirement exemption
amount will be effective for all depository institutions for the
fourteen-day reserve maintenance period beginning January 16, 2020. For
depository institutions that report deposit data weekly, this
maintenance period corresponds to the fourteen-day computation period
that begins December 17, 2019. For depository institutions that report
deposit data quarterly, this maintenance period corresponds to the
seven-day computation period that begins December 17, 2019.
II. Deposit Reports
Section 11(b)(2) of the Federal Reserve Act authorizes the Board to
require depository institutions to file reports of their liabilities
and assets as
[[Page 64706]]
the Board may determine to be necessary or desirable to enable it to
discharge its responsibility to monitor and control the monetary and
credit aggregates. The Board screens depository institutions each year
and assigns them to one of four deposit reporting panels (weekly
reporters, quarterly reporters, annual reporters, or nonreporters). The
panel assignment for annual reporters is effective in June of the
screening year; the panel assignment for weekly and quarterly reporters
is effective in September of the screening year.
In order to ease reporting burden, the Board permits smaller
depository institutions to submit deposit reports less frequently than
larger depository institutions. The Board permits depository
institutions with net transaction accounts above the reserve
requirement exemption amount but total transaction accounts, savings
deposits, and small time deposits below a specified level (the
``nonexempt deposit cutoff'') to report deposit data quarterly.
Depository institutions with net transaction accounts above the reserve
requirement exemption amount and with total transaction accounts,
savings deposits, and small time deposits greater than or equal to the
nonexempt deposit cutoff are required to report deposit data weekly.
The Board requires certain large depository institutions to report
weekly regardless of the level of their net transaction accounts if the
depository institution's total transaction accounts, savings deposits,
and small time deposits exceeds or is equal to a specified level (the
``reduced reporting limit''). The nonexempt deposit cutoff level and
the reduced reporting limit are adjusted annually, by an amount equal
to 80 percent of the increase, if any, in total transaction accounts,
savings deposits, and small time deposits of all depository
institutions over the one-year period that ends on the June 30 prior to
the adjustment.
From June 30, 2018, to June 30, 2019, total transaction accounts,
savings deposits, and small time deposits at all depository
institutions increased 3.5 percent, from $12,601 billion to $13,046
billion. Accordingly, the Board is increasing the nonexempt deposit
cutoff level by $29.0 million to $1.058 billion for 2020 (up from
$1.029 billion in 2019). The Board is also increasing the reduced
reporting limit by $60.6 million to $2.208 billion for 2020 (up from
$2.147 billion in 2019).\2\
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\2\ Consistent with Board practice, the nonexempt deposit cutoff
level and the reduced reporting limit have been rounded to the
nearest $1 million.
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Beginning in 2020, the boundaries of the four deposit reporting
panels will be defined as follows. Those depository institutions with
net transaction accounts over $16.9 million (the reserve requirement
exemption amount) or with total transaction accounts, savings deposits,
and small time deposits greater than or equal to $2.208 billion (the
reduced reporting limit) are subject to detailed reporting, and must
file a Report of Transaction Accounts, Other Deposits and Vault Cash
(FR 2900 report) either weekly or quarterly. Of this group, those with
total transaction accounts, savings deposits, and small time deposits
greater than or equal to $1.058 billion (the nonexempt deposit cutoff
level) are required to file the FR 2900 report each week, while those
with total transaction accounts, savings deposits, and small time
deposits less than $1.058 billion are required to file the FR 2900
report each quarter. Those depository institutions with net transaction
accounts less than or equal to $16.9 million (the reserve requirement
exemption amount) and with total transaction accounts, savings
deposits, and small time deposits less than $2.208 billion (the reduced
reporting limit) are eligible for reduced reporting, and must either
file a deposit report annually or not at all. Of this group, those with
total deposits greater than $16.9 million (but with total transaction
accounts, savings deposits, and small time deposits less than $2.208
billion) are required to file the Annual Report of Deposits and
Reservable Liabilities (FR 2910a) report annually, while those with
total deposits less than or equal to $16.9 million are not required to
file a deposit report. A depository institution that adjusts reported
values on its FR 2910a report in order to qualify for reduced reporting
will be shifted to an FR 2900 reporting panel.
III. Regulatory Analysis
Administrative Procedure Act
The provisions of 5 U.S.C. 553(b) relating to notice of proposed
rulemaking have not been followed in connection with the adoption of
these amendments. The amendments involve expected, ministerial
adjustments prescribed by statute and by the Board's policy concerning
reporting practices. The adjustments in the reserve requirement
exemption amount, the low reserve tranche, the nonexempt deposit cutoff
level, and the reduced reporting limit serve to reduce regulatory
burdens on depository institutions. Accordingly, the Board finds good
cause for determining, and so determines, that notice in accordance
with 5 U.S.C. 553(b) is unnecessary.
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) does not apply to a rulemaking
where a general notice of proposed rulemaking is not required.\3\ As
noted previously, the Board has determined that it is unnecessary to
publish a general notice of proposed rulemaking for this final rule.
Accordingly, the RFA's requirements relating to an initial and final
regulatory flexibility analysis do not apply.
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\3\ 5 U.S.C. 603 and 604.
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Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995,\4\ the
Board reviewed this final rule. No collections of information pursuant
to the Paperwork Reduction Act are contained in the final rule.
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\4\ 44 U.S.C. 3506; 5 CFR part 1320.
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List of Subjects in 12 CFR Part 204
Banks, banking, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Board is amending 12
CFR part 204 as follows:
PART 204--RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS
(REGULATION D)
0
1. The authority citation for part 204 continues to read as follows:
Authority: 12 U.S.C. 248(a), 248(c), 461, 601, 611, and 3105.
0
2. Section 204.4 is amended by revising paragraph (f) to read as
follows:
Sec. 204.4 Computation of required reserves.
* * * * *
(f) For all depository institutions, Edge and Agreement
corporations, and United States branches and agencies of foreign banks,
required reserves are computed by applying the reserve requirement
ratios in table 1 to this paragraph (f) to net transaction accounts,
nonpersonal time deposits, and Eurocurrency liabilities of the
institution during the computation period.
[[Page 64707]]
Table 1 to Paragraph (f)
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Reservable liability Reserve requirement
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Net Transaction Accounts: ...........................
$0 to reserve requirement exemption 0 percent of amount.
amount ($16.9 million).
Over reserve requirement exemption 3 percent of amount.
amount ($16.9 million) and up to low
reserve tranche ($127.5 million).
Over low reserve tranche ($127.5 $3,318,000 plus 10 percent
million). of amount over $127.5
million.
Nonpersonal time deposits.............. 0 percent.
Eurocurrency liabilities............... 0 percent.
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By order of the Board of Governors of the Federal Reserve
System, acting through the Director of the Division of Monetary
Affairs under delegated authority, November 19, 2019.
Ann Misback,
Secretary of the Board.
[FR Doc. 2019-25428 Filed 11-22-19; 8:45 am]
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