Rule2021-26568
Reserve Requirements of Depository Institutions
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 8, 2021
Effective
January 7, 2022
Issuing agencies
Federal Reserve System
Abstract
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 2022. The annual indexation of these amounts is required notwithstanding the Board's action in March 2020 setting all reserve requirement ratios to zero. The Regulation D amendments set the reserve requirement exemption amount for 2022 at $32.4 million (increased from $21.1 million in 2021) and the amount of the low reserve tranche at $640.6 million (increased from $182.9 million in 2021). The adjustments to both of these amounts are derived using statutory formulas specified in the Federal Reserve Act (the "Act"). The increases in the exemption amount and low reserve tranche for 2022 are larger than in previous years, primarily reflecting the one-time effects of the Regulation D amendments that eliminated the six convenient transfer limit from the definition of a savings deposit and recognized savings deposits as a type of transaction account. The annual indexation of the reserve requirement exemption amount and low reserve tranche, though required by statute, will not affect depository institutions' reserve requirements, which will remain zero.
Full Text
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<title>Federal Register, Volume 86 Issue 233 (Wednesday, December 8, 2021)</title>
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[Federal Register Volume 86, Number 233 (Wednesday, December 8, 2021)]
[Rules and Regulations]
[Pages 69577-69578]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-26568]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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Federal Register / Vol. 86, No. 233 / Wednesday, December 8, 2021 /
Rules and Regulations
[[Page 69577]]
FEDERAL RESERVE SYSTEM
12 CFR Part 204
[Regulation D; Docket No. R-1762]
RIN 7100-AG 24
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 2022. The
annual indexation of these amounts is required notwithstanding the
Board's action in March 2020 setting all reserve requirement ratios to
zero. The Regulation D amendments set the reserve requirement exemption
amount for 2022 at $32.4 million (increased from $21.1 million in 2021)
and the amount of the low reserve tranche at $640.6 million (increased
from $182.9 million in 2021). The adjustments to both of these amounts
are derived using statutory formulas specified in the Federal Reserve
Act (the ``Act''). The increases in the exemption amount and low
reserve tranche for 2022 are larger than in previous years, primarily
reflecting the one-time effects of the Regulation D amendments that
eliminated the six convenient transfer limit from the definition of a
savings deposit and recognized savings deposits as a type of
transaction account. The annual indexation of the reserve requirement
exemption amount and low reserve tranche, though required by statute,
will not affect depository institutions' reserve requirements, which
will remain zero.
DATES: Effective January 7, 2022.
Compliance dates: The new low reserve tranche and reserve
requirement exemption amount will apply beginning January 1, 2022.
FOR FURTHER INFORMATION CONTACT: Sophia H. Allison, Senior Special
Counsel (202/452-3565), Kristen Payne, Lead Financial Institution and
Policy Analyst (202/452-2872), or Francis A. Martinez, Lead Financial
Institution and Policy Analyst (202/245-4217), Division of Monetary
Affairs; Board of Governors of the Federal Reserve System, 20th and C
Streets NW, Washington, DC 20551.
SUPPLEMENTARY INFORMATION: Section 19(b)(2) of the 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. The Board's actions with respect to this provision is
discussed below.
I. Reserve Requirements
Section 19(b) of the Act authorizes different ranges of reserve
requirement ratios depending on the amount of transaction account
balances at a depository institution. Section 19(b)(11)(A) of the Act
(12 U.S.C. 461(b)(11)(A)) provides that a zero percent reserve
requirement ratio 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 67.0 percent, from $10,901 billion to $18,204 billion,
between June 30, 2020, and June 30, 2021. Accordingly, the Board is
amending Regulation D to set the reserve requirement exemption amount
for 2022 at $32.4 million, an increase of $11.3 million from its level
in 2021.\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, may be subject to a reserve
requirement ratio of not more than 3 percent (and which may be zero).
Transaction account balances over the low reserve tranche may be
subject to a reserve requirement ratio of not more than 14 percent (and
which may be zero). 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
312.8 percent, from $3,866 billion to $15,961 billion, between June 30,
2020, and June 30, 2021. Accordingly, the Board is amending Regulation
D to set the low reserve tranche for net transaction accounts for 2022
at $640.6 million, an increase of $457.7 million from 2021. The new
reserve requirement exemption amount and low reserve tranche will be
effective for all depository institutions beginning January 1, 2022.
Effective March 26, 2020, the Board reduced reserve requirement
ratios on all net transaction accounts to zero percent, eliminating
reserve requirements for all depository institutions. The annual
indexation of the reserve requirement exemption amount and the low
reserve tranche for 2022 is required by statute but will not affect
depository institutions' reserve requirements, which will remain zero.
II. 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
[[Page 69578]]
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 and the low reserve tranche
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.\2\ 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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\2\ 5 U.S.C. 603 and 604.
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Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995,\3\ 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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\3\ 44 U.S.C. 3506; 5 CFR 1320.
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List of Subjects in 12 CFR Part 204
Banks, banking, Reporting and recordkeeping requirements.
Authority and Issuance
For the reasons set forth in the preamble, the Board is amends 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.
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 ($32.4 million).
Over reserve requirement exemption 0 percent of amount.
amount ($32.4 million) and up to low
reserve tranche ($640.6 million).
Over low reserve tranche ($640.6 $0 plus 0 percent of
million). amount over $640.6
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, December 3, 2021.
Ann E. Misback,
Secretary of the Board.
[FR Doc. 2021-26568 Filed 12-7-21; 8:45 am]
BILLING CODE 6210-01-P
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