Rule2022-08255
Regulation D: 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
April 18, 2022
Effective
April 18, 2022
Issuing agencies
Federal Reserve System
Abstract
The Board of Governors of the Federal Reserve System ("Board") has adopted final amendments to its regulations to revise the rate of interest paid on balances ("IORB") maintained at Federal Reserve Banks by or on behalf of eligible institutions. The final amendments specify that IORB is 0.40 percent, a 0.25 percentage point increase from its prior level. The amendment is intended to enhance the role of IORB in maintaining the federal funds rate in the target range established by the Federal Open Market Committee ("FOMC" or "Committee").
Full Text
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<title>Federal Register, Volume 87 Issue 74 (Monday, April 18, 2022)</title>
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[Federal Register Volume 87, Number 74 (Monday, April 18, 2022)]
[Rules and Regulations]
[Pages 22812-22813]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-08255]
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FEDERAL RESERVE SYSTEM
12 CFR Part 204
[Docket No. R-1768]
RIN 7100-AG28
Regulation D: Reserve Requirements of Depository Institutions
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Final rule.
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SUMMARY: The Board of Governors of the Federal Reserve System
(``Board'') has adopted final amendments to its regulations to revise
the rate of interest paid on balances (``IORB'') maintained at Federal
Reserve Banks by or on behalf of eligible institutions. The final
amendments specify that IORB is 0.40 percent, a 0.25 percentage point
increase from its prior level. The amendment is intended to enhance the
role of IORB in maintaining the federal funds rate in the target range
established by the Federal Open Market Committee (``FOMC'' or
``Committee'').
DATES:
Effective date: The amendments to part 204 (Regulation D) are
effective April 18, 2022.
Applicability date: The IORB rate change was applicable on March
17, 2022.
FOR FURTHER INFORMATION CONTACT: Sophia H. Allison, Senior Special
Counsel (202-452-3565), Legal Division, or Francis Martinez, Lead
Financial Institution & Policy Analyst (202-245-4217), or Laura
Lipscomb, Deputy Associate Director (202-834-2979), Division of
Monetary Affairs; for users of telephone systems via text telephone
(TTY) or any TTY-based Telecommunications Relay Services (TRS), please
call 711 from any telephone, anywhere in the United States; Board of
Governors of the Federal Reserve System, 20th and C Streets NW,
Washington, DC 20551.
SUPPLEMENTARY INFORMATION:
I. Statutory and Regulatory Background
For monetary policy purposes, section 19 of the Federal Reserve Act
(``Act'') imposes reserve requirements on certain types of deposits and
other liabilities of depository institutions.\1\ Regulation D, which
implements section 19 of the Act, requires that a depository
institution meet reserve requirements by holding cash in its vault, or
if vault cash is insufficient, by maintaining a balance in an account
at a Federal Reserve Bank (``Reserve Bank'').\2\ Section 19 also
provides that balances maintained by or on behalf of certain
institutions in an account at a Reserve Bank may receive earnings to be
paid by the Reserve Bank at least once each quarter, at a rate or rates
not to exceed the general level of short-term interest rates.\3\
Institutions that are eligible to receive earnings on their balances
held at Reserve Banks (``eligible institutions'') include depository
institutions and certain other institutions.\4\ Section 19 also
provides that the Board may prescribe regulations concerning the
payment of earnings on balances at a Reserve Bank.\5\ Prior to these
amendments, Regulation D established IORB at 0.15 percent.\6\
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\1\ 12 U.S.C. 461(b). In March 2020, the Board set all reserve
requirement ratios to zero percent. See Interim Final Rule, 85
FR16525 (Mar. 24, 2020); Final Rule, 86 FR 8853 (Feb. 10, 2021).
\2\ 12 CFR 204.5(a)(1).
\3\ 12 U.S.C. 461(b)(1)(A) & (b)(12)(A).
\4\ See 12 U.S.C. 461(b)(1)(A) & (b)(12)(C); see also 12 CFR
204.2(y).
\5\ See 12 U.S.C. 461(b)(12)(B).
\6\ See 12 CFR 204.10(b)(1).
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II. Amendment to IORB
The Board is amending Sec. 204.10(b)(1) of Regulation D to
establish IORB at 0.40 percent. The amendment represents a 0.25
percentage point increase in IORB. This decision was announced on March
16, 2022, with an effective date of March 17, 2022, in the Federal
Reserve Implementation Note that accompanied the FOMC's statement on
March 16, 2022. The FOMC statement stated that the Committee decided to
raise the target range for the federal funds rate to \1/4\ to \1/2\
percent.
A Federal Reserve Implementation note stated:
The Board of Governors of the Federal Reserve System voted
unanimously to raise the interest rate paid on reserve balances to
0.4 percent, effective March 17, 2022.
As a result, the Board is amending Sec. 204.10(b)(1) of Regulation
D to establish IORB at 0.40 percent.
III. Administrative Procedure Act
In general, the Administrative Procedure Act (``APA'') \7\ imposes
three principal requirements when an agency promulgates legislative
rules (rules made pursuant to Congressionally-delegated authority): (1)
Publication with adequate notice of a proposed rule; (2) followed by a
meaningful opportunity for the public to comment on the rule's content;
and (3) publication of the final rule not less than 30 days before its
effective date. The APA provides that notice and comment procedures do
not apply if the agency for good cause finds them to be ``unnecessary,
impracticable, or contrary to the public interest.'' \8\ Section 553(d)
of the APA also provides that publication at least 30 days prior to a
rule's effective date is not required for (1) a substantive rule which
grants or recognizes an exemption or relieves a restriction; (2)
interpretive rules and statements of policy; or (3) a rule for which
the agency finds good cause for
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shortened notice and publishes its reasoning with the rule.\9\
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\7\ 5 U.S.C. 551 et seq.
\8\ 5 U.S.C. 553(b)(3)(A).
\9\ 5 U.S.C. 553(d).
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The Board has determined that good cause exists for finding that
the notice, public comment, and delayed effective date provisions of
the APA are unnecessary, impracticable, or contrary to the public
interest with respect to these final amendments to Regulation D. The
rate change for IORB that is reflected in the final amendment to
Regulation D was made with a view towards accommodating commerce and
business and with regard to their bearing upon the general credit
situation of the country. Notice and public comment would prevent the
Board's action from being effective as promptly as necessary in the
public interest and would not otherwise serve any useful purpose.
Notice, public comment, and a delayed effective date would create
uncertainty about the finality and effectiveness of the Board's action
and undermine the effectiveness of that action. Accordingly, the Board
has determined that good cause exists to dispense with the notice,
public comment, and delayed effective date procedures of the APA with
respect to this final amendment to Regulation D.
IV. Regulatory Flexibility Analysis
The Regulatory Flexibility Act (``RFA'') does not apply to a
rulemaking where a general notice of proposed rulemaking is not
required.\10\ As noted previously, the Board has determined that it is
unnecessary and contrary to the public interest 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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\10\ 5 U.S.C. 603, 604.
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V. Paperwork Reduction Act
In accordance with the Paperwork Reduction Act (``PRA'') of
1995,\11\ the Board reviewed the final rule under the authority
delegated to the Board by the Office of Management and Budget. The
final rule contains no requirements subject to the PRA.
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\11\ 44 U.S.C. 3506; see 5 CFR part 1320, appendix A.1.
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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 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 204.10 is amended by revising paragraph (b)(1) to read as
follows:
Sec. 204.10 Payment of interest on balances.
* * * * *
(b) * * *
(1) For balances maintained in an eligible institution's master
account, interest is the amount equal to the interest on reserve
balances rate (``IORB rate'') on a day multiplied by the total balances
maintained on that day. The IORB rate is 0.40 percent.
* * * * *
By order of the Board of Governors of the Federal Reserve
System.
Ann E. Misback,
Secretary of the Board.
[FR Doc. 2022-08255 Filed 4-15-22; 8:45 am]
BILLING CODE 6210-01-P
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