|
[Main Tabs]
[Table of Contents - 7500]
[Index]
[Previous Page]
[Next Page]
[Search]
7500 - FRB Regulations
{{10-31-08 p.7571}}
PART 204RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS
(REGULATION D)
Regulations
Sec. 204.1
Authority, purpose and scope.
204.2
Definitions.
204.3
Computation and maintenance.
204.4
[Reserved]
204.5
Emergency reserve requirement.
204.6
Supplemental reserve requirement.
204.7
Reserve deficiencies.
204.8
International banking facilities.
204.9
Reserve requirement ratios.
204.10
Payment of interest on balances.
Interpretations
204.121
Bankers' banks.
204.122
Secondary market activities of International Banking Facilities.
204.123
Sale of Federal funds by investment companies or trusts in which the
entire beneficial interest is held exclusively by depository
institutions.
204.124
Repurchase agreement involving shares of a money market mutual fund
whose portfolio consists wholly of United States Treasury and Federal
agency securities.
204.125
Foreign, international, and supranational entities referred to in
§§ 204.2(C)(I)(iv)(E) and 204.8(a)(2)(i)(B)(5).
204.126
Depository institution participation in ``federal funds'' market.
204.127
Nondepository participation in ``federal funds'' market.
204.128
Deposits at foreign branches guaranteed by domestic office of a
depository institution.
204.129
[Removed]
204.130
Eligibility for NOW Accounts.
204.131
Participation by a depository institution in the secondary market for
its own time deposits.
204.132
Treatment of loan strip participations.
204.133
Multiple savings deposits treated as a transaction account.
204.134
Linked time deposits and transaction accounts.
204.135
Shifting funds between depository institutions to make use of the low
reserve tranche.
204.136
Treatment of trust overdrafts for reserve requirement reporting
purposes.
AUTHORITY: 12 U.S.C. 248(a), 248(c), 371a, 461, 601, 611, and 3105.
SOURCE: The provisions of this Part 204 appear at 45 Fed. Reg.
56009, August 22, 1980, and 58 Fed. Reg. 50512, September 28, 1993,
except as otherwise noted.
§ 204.1 Authority, purpose and scope.
(a) Authority. This part is issued under the authority
of section 19 (12 U.S.C. 461 et sec.) and other
provisions of the Federal Reserve Act and of section 7 of the
International Banking Act of 1978 (12 U.S.C. 3105).
(b) Purpose. This part relates to reserves that
depository institutions are required to maintain for the purpose of
facilitating the implementation of monetary policy by the Federal
Reserve System.
(c) Scope. (1) The following depository institutions
are required to maintain reserves in accordance with this part:
(i) Any insured bank as defined in section 3 of the Federal
Deposit Insurance Act (12 U.S.C.
1813(h)) or any bank that is eligible to apply to become an
insured bank under section 5 of such Act
(12 U.S.C. 1815);
{{10-31-08 p.7572}}
(ii) Any savings bank or mutual savings bank as defined in
section 3 of the Federal Deposit Insurance Act
(12 U.S.C. 1813(f),
(g));
(iii) Any insured credit union as defined in section 101 of the
Federal Credit Union Act (12 U.S.C. 1752(7)) or any credit union that
is eligible to apply to become an insured credit union under section
201 of such Act (12 U.S.C. 1781);
(iv) Any member as defined in section 2 of the Federal Home Loan
Bank Act (12 U.S.C. 1422(4)); and
(v) Any insured institution as defined in section 401 of the
National Housing Act (12 U.S.C. 1724(a)) or any institution which is
eligible to apply to become an insured institution under section 403 of
such Act (12 U.S.C. 1726).
(2) Except as may be otherwise provided by the Board, a foreign
bank's branch or agency located in the United States is required to
comply with the provisions of this part in the same manner and to the
same extent as if the branch or agency were a member bank, if its
parent foreign bank (i) has total worldwide consolidated bank assets in
excess of $1 billion; or (ii) is controlled by a foreign company or by
a group of foreign companies that own or control foreign banks that in
the aggregate have total worldwide consolidated bank assets in excess
of $1 billion. In addition, any other foreign bank's branch located in
the United States that is eligible to apply to become an insured bank
under section 5 of the Federal Deposit Insurance Act (12 U.S.C. 1815)
is required to maintain reserves in accordance with this part as a
nonmember depository institution.
(3) Except as may be otherwise provided by the Board, an Edge
Corporation (12 U.S.C. 611 et seq.) or an Agreement
Corporation (12 U.S.C. 601 et seq.) is required to
comply with the provisions of this part in the same manner and to the
same extent as a member bank.
(4) This part does not apply to any financial institution that
(i) is organized solely to do business with other financial
institutions; (ii) is owned primarily by the financial institutions
with which it does business; and (iii) does not do business with the
general public.
(5) The provisions of this part do not apply to any deposit that
is payable only at an office located outside the United States.
[Codified to 12 C.F.R.
§ 204.1]
§ 204.2 Definitions.
For purposes of this part, the following definitions apply unless
otherwise specified:
(a)(1) "Deposit" means:
(i) The unpaid balance of money or its equivalent received or
held by a depository institution in the usual course of business and
for which it has given or is obligated to give credit, either
conditionally or unconditionally, to an account, including interest
credited, or which is evidenced by an instrument on which the
depository institution is primarily liable;
(ii) Money received or held by a depository institution, or the
credit given for money or its equivalent received or held by the
depository institution in the usual course of business for a special or
specific purpose, regardless of the legal relationship established
thereby, including escrow funds, funds held as security for securities
loaned by the depository institution, funds deposited as advance
payment on subscriptions to United States government securities, and
funds held to meet its acceptances;
(iii) An outstanding draft, cashier's check, money order, or
officer's check drawn on the depository institution and issued in the
usual course of business for any purpose, including payment for
services, dividends, or purchases;
(iv) Any due bill or other liability or undertaking on the part
of a depository institution to sell or deliver securities to, or
purchase securities for the account of, any customer (including another
depository institution), involving either the receipt of funds by the
depository institution, regardless of the use of the proceeds, or a
debit to an account of
{{4-29-94 p.7572.01}}the customer before the securities
are delivered. A deposit arises thereafter, if after three business
days from the date of issuance of the obligation, the depository
institution does not deliver the securities purchased or does not fully
collateralize its obligation with securities similar to the securities
purchased. A security is similar if it is of the same type and if it is
of comparable maturity to that purchased by the customer;
{{10-30-92 p.7573}}
(v) Any liability of a depository institution's affiliate that is
not a depository institution, on any promissory note, acknowledgment of
advance, due bill, or similar obligation (written or oral), with a
maturity of less than one and one-half years, to the extent that the
proceeds are used to supply or to maintain the availability of funds
(other than capital) to the depository institution, except any such
obligation that, had it been issued directly by the depository
institution, would not constitute a deposit. If an obligation of an
affiliate of a depository institution is regarded as a deposit and is
used to purchase assets from the depository institution, the maturity
of the deposit is determined by the shorter of the maturity of the
obligation issued or the remaining maturity of the assets purchased. If
the proceeds from an affiliate's obligation are placed in the
depository institution in the form of a reservable deposit, no reserves
need be maintained against the obligation of the affiliate since
reserves are required to be maintained against the deposit issued by
the depository institution. However, the maturity of the deposit issued
to the affiliate shall be the shorter of the maturity of the
affiliate's obligation or the maturity of the deposit;
(vi) Credit balances;
(vii) Any liability of a depository institution on any promissory
note, acknowledgment of advance, bankers' acceptance, or similar
obligation (written or oral), including mortgage-backed bonds, that is
issued or undertaken by a depository institution as a means of
obtaining funds, except any such obligation that:
(A) Is issued or undertaken and held for the account of:
(1) An office located in the United States of
another depository institution, foreign bank, Edge or Agreement
corporation, or New York Investment (Article XII) Company;
(2) The United States government or an agency
thereof; or
(3) The Export-Import Bank of the United
States, Minbanc Capital Corporation, the Government Development Bank
for Puerto Rico, a Federal Reserve bank, a Federal Home Loan bank, or
the National Credit Union Administration Central Liquidity Facility;
(B) Arises from a transfer of direct obligations of, or
obligations that are fully guaranteed as to principal and interest by,
the United States government or any agency thereof that the depository
institution is obligated to repurchase;
(C) Is not insured by a federal agency, is subordinated to the
claims of depositors, has a weighted average maturity of five years or
more, and is issued by a depository institution with the approval of,
or under the rules and regulations of, its primary federal supervisor;
(D) Arises from a borrowing by a depository institution from a
dealer in securities, for one business day, of proceeds of a transfer
of deposit credit in a Federal Reserve bank or other immediately
available funds (commonly referred to as "federal funds"),
received by such dealer on the date of the loan in connection with
clearance of securities transactions; or
(E) Arises from the creation, discount and subsequent sale by a
depository institution of its bankers' acceptance of the type described
in paragraph 7 of section 13 of the Federal Reserve Act (12 U.S.C.
372);
(viii) Any liability of a depository institution that arises from
the creation after June 20, 1983, of a bankers' acceptance that is not
of the type described in paragraph 7 of section 13 of the Federal
Reserve Act (12 U.S.C. 372) except any such liability held for the
account of an entity specified in § 204.2(a)(1)(vii)(A).
(2) "Deposit" does not include:
(i) Trust funds received or held by the depository institution
that it keeps properly segregated as trust funds and apart from its
general assets or which it deposits in another institution to the
credit of itself as trustee or other fiduciary. If trust funds are
deposited with the commercial department of the depository institution
or otherwise mingled with its general assets, a deposit liability of
the institution is created;
(ii) An obligation that represents a conditional, contingent or
endorser's liability;
{{10-30-92 p.7574}}
(iii) Obligations, the proceeds of which are not used by the
depository institution for purposes of making loans, investments, or
maintaining liquid assets such as cash or "due from" depository
institutions or other similar purposes. An obligation issued for the
purpose of raising funds to purchase business premises, equipment,
supplies, or similar assets is not a deposit;
(iv) Accounts payable;
(v) Hypothecated deposits created by payments on an installment
loan where (A) the amounts received are not used immediately to reduce
the unpaid balance due on the loan until the sum of the payments equals
the entire amount of loan principal and interest; (B) and where such
amounts are irrevocably assigned to the depository institution and
cannot be reached by the borrower or creditors of the borrower;
(vi) Dealer reserve and differential accounts that arise from the
financing of dealer installment accounts receivable, and which provide
that the dealer may not have access to the funds in the account until
the installment loans are repaid, as long as the depository institution
is not actually (as distinguished from contingently) obligated to make
credit or funds available to the dealer;
(vii) A dividend declared by a depository institution for the
period intervening between the date of the declaration of the dividend
and the date on which it is paid;
(viii) An obligation representing a pass through account, as
defined in this section;
(ix) An obligation arising from the retention by the depository
institution of no more than a 10 percent interest in a pool of
conventional 1-4 family mortgages that are sold to third parties;
(x) An obligation issued to a State or municipal housing
authority under a loan-to-lender program involving the issuance of
tax-exempt bonds and the subsequent lending of the proceeds to the
depository institution for housing finance purposes;
(xi) Shares of a credit union held by the National Credit Union
Administration or the National Credit Union Administration Central
Liquidity Facility under a statutorily authorized assistance program;
and
(xii) Any liability of a United States branch or agency of a
foreign bank to another United States branch or agency of the same
foreign bank, or the liability of the United States office of an Edge
Corporation to another United States office of the same Edge
Corporation.
(b)(1) "Demand deposit" means a deposit that is
payable on demand, or a deposit issued with an original maturity or
required notice period of less than seven days, or a deposit
representing funds for which the depository institution does not
reserve the right to require at least seven days' written notice of an
intended withdrawal. Demand deposits may be in the form of:
(i) Checking accounts;
(ii) Certified, cashier's and officer's checks (including checks
issued by the depository institution in payment of dividends);
(iii) Traveler's checks and money orders that are primary
obligations of the issuing institution;
(iv) Checks or drafts drawn by, or on behalf of, a non-United
States office of a depository institution on an account maintained at
any of the institution's United States offices;
(v) Letters of credit sold for cash or its equivalent;
(vi) Withheld taxes, withheld insurance and other withheld funds;
(vii) Time deposits that have matured or time deposits upon which
the contractually required notice of withdrawal as given and the notice
period has expired and which have not been renewed (either by action of
the depositor or automatically under the terms of the deposit
agreement); and
(viii) An obligation to pay, on demand or within six days, a
check (or other instrument, device, or arrangement for the transfer of
funds) drawn on the depository institution, where the account of the
institution's customer already has been debited.
{{12-31-96 p.7575}}
(2) The term demand deposit also means deposits or
accounts on which the depository institution has reserved the right to
require at least seven days' written notice prior to withdrawal or
transfer of any funds in the account and from which the depositor is
authorized to make withdrawals or transfers in excess of the withdrawal
or transfer limitations specified in § 204.2(d)(2) for such an
account and the account is not a NOW account, or an ATS account or
other account that meets the criteria specified in either
§ 204.2(b)(3)(ii) or (iii) below.
(3) Demand deposit does not include:
(i) Any account that is a time deposit or a savings deposit under
this part;
(ii) Any deposit or account on which the depository institution
has reserved the right to require at least seven days' written notice
prior to withdrawal or transfer of any funds in the account and
either--
(A) Is subject to check, draft, negotiable order of withdrawal,
share draft, or similar item, such as an account authorized by
12 USC 1832(a) ("NOW
Account") and a savings deposit described in § 204.2(d)(2),
provided that the depositor is eligible to hold a NOW account; or
(B) From which the depositor is authorized to make
transfers by preauthorized transfer or telephonic (including data
transmission) agreement, order or instruction to another account or to
a third party, provided that the depositor is eligible to hold a NOW
account;
(iii) Any deposit or account on which the depository institution
has reserved the right to require at least seven days' written notice
prior to withdrawal or transfer of any funds in the account and from
which withdrawals may be made automatically through payment to the
depository institution itself or through transfer of credit to a demand
deposit or other account in order to cover checks or drafts drawn upon
the institution or to maintain a specified balance in, or to make
periodic transfers to such other account, such as accounts authorized
by 12 USC 371a (automatic
transfer account or ATS account), provided that the depositor is
eligible to hold an ATS account;
(iv) Checks or drafts drawn by the depository institution on the
Federal Reserve or on another depository institution; or
(v) IBF time deposits meeting the requirements of
§ 204.8(a)(2).
(c)(1) Time deposit means:
(i) A deposit that the depositor does not have a right and is not
permitted to make withdrawals from within six days after the date of
deposit unless the deposit is subject to an early withdrawal penalty of
at least seven days' simple interest on amounts withdrawn within the
first six days after deposit. 1
A time deposit from which partial early withdrawals
{{12-31-96 p.7576}}are permitted must impose additional
early withdrawal penalties of at least seven days' simple interest on
amounts withdrawn within six days after each partial withdrawal. If
such additional early withdrawal penalties are not imposed, the account
ceases to be a time deposit. The account may become a savings deposit
if it meets the requirements for a saving deposit; otherwise it becomes
a transaction account. Time deposit includes funds--
(A) Payable on a specified date not less than seven days after
the date of deposit;
(B) Payable at the expiration of a specified time not less than
seven days after the date of deposit;
(C) Payable only upon written notice that is actually required to
be given by the depositor not less than seven days prior to withdrawal;
(D) Held in "club" accounts (such as "Christmas club"
accounts and "vacation club" accounts that are not maintained as
"savings deposits") that are deposited under written contracts
providing that no withdrawals shall be made until a certain number of
periodic deposits have been made during a period of not less than three
months even though some of the deposits may be made within six days
from the end of the period; or
(E) Share certificates and certificates of indebtedness issued by
credit unions, and certificate accounts and notice accounts issued by
savings and loan associations;
(ii) A "savings deposit;"
(iii) An "IBF time deposit" meeting the requirements of
§ 204.8(a)(2); and
(iv) Borrowings, regardless of maturity, represented by a
promissory note, an acknowledgment of advance, or similar obligation
described in § 204.2(a)(1)(vii) that is issued to, or any bankers'
acceptance (other than the type described in 12 U.S.C. 372) of the
depository institution held by--
(A) Any office located outside the United States or another
depository institution or Edge or agreement corporation organized under
the laws of the United States;
(B) Any office located outside the United States of a foreign
bank;
(C) A foreign national government, or an agency or
instrumentality thereof, 2
engaged principally in activities which are ordinarily performed in the
United States by governmental entities;
(D) An international entity of which the United States is a
member; or
(E) Any other foreign, international, or supranational entity
specifically designated by the Board. 3
(2) A time deposit may be represented by a transferable or
nontransferable, or a negotiable or nonnegotiable, certificate,
instrument, passbook, or statement, or by book entry or otherwise.
(d)(1) Savings deposit means a deposit or account with
respect to which the depositor is not required by the deposit contract
but may at any time be required by the depository institution to give
written notice of an intended withdrawal not less than seven days
before withdrawal is made, and that is not payable on a specified date
or at the expiration of a specified time after the date of deposit. The
term "savings deposit" includes a regular share account at a
credit union and a regular account at a savings and loan association.
(2) The term savings deposit also means: A deposit or
account, such as an account commonly known as a passbook savings
account, a statement savings account, or as a money market deposit
account ("MMDA"), that otherwise meets the requirements of
§ 204.2(d)(1) and from which, under the terms of the deposit contract
or by practice of the depository insitution, the depositor is
permitted or authorized to make no more than six transfers and
withdrawals, or a combination of such transfers and withdrawals, per
calendar month or statement cycle (or similar period) of at least four
weeks, to another account (including a transaction account) of the
depositor at the same institution or to a third party by means of a
preauthorized or automatic transfer, or telephonic (including data
transmission) agreement, order or instruction, and no more than three
of the six such
{{12-31-96 p.7577}}transfers may be made by check,
draft, debit card, or similar order made by the depositor and payable
to third parties. A "preauthorized transfer" includes any
arrangement by the depository institution to pay a third party from the
account of a depositor upon written or oral instruction (including an
order received through an automated clearing house (ACH)) or any
arrangement by a depository institution to pay a third party from the
account of the depositor at a predetermined time or on a fixed
schedule. Such an account is not a "transaction account" by
virtue of an arrangement that permits transfers for the purpose of
repaying loans and associated expenses at the same depository
institution (as originator or servicer) or that permits transfers of
funds from this account to another account of the same depositor at the
same institution or permits withdrawals (payments directly to the
depositor) from the account when such transfers or withdrawals are made
by mail, messenger, automated teller machine, or in person or when such
withdrawals are made by telephone (via check mailed to the depositor)
regardless of the number of such transfers or
withdrawals. 4
(3) A deposit may continue to be classified as a savings deposit
even if the depository institution exercises its right to require
notice of withdrawal.
(4) Savings deposit does not include funds deposited
to the credit of the depository institution's own trust department
where the funds involved are utilized to cover checks or drafts. Such
funds are "transaction accounts."
(e) Transaction account means a deposit or account from
which the depositor or account holder is permitted to make transfers or
withdrawals by negotiable or transferable instrument, payment order of
withdrawal, telephone transfer, or other similar device for the purpose
of making payments or transfers to third persons or others or from
which the depositor may make third party payments at an automated
teller machine ("ATM") or a remote service unit, or other
electronic device, including by debit card, but the term does not
include savings deposits or accounts described in § 204.2(d)(2) even
though such accounts permit third party transfers. Transaction
account includes:
(1) Demand deposits;
(2) Deposits or accounts on which the depository institution has
reserved the right to require at least seven days' written notice prior
to withdrawal or transfer of any funds in the account and that are
subject to check, draft, negotiable order of withdrawal, share draft,
or other similar item, except accounts described in § 204.2(d)(2)
(savings deposits), but including accounts authorized by 12 USC 1832(a)
(NOW accounts).
(3) Deposits or accounts on which the depository institution has
reserved the right to require at least seven days' written notice prior
to withdrawal or transfer of any funds in the account and from which
withdrawals may be made automatically through payment to the depository
institution itself or through transfer or credit to a demand deposit or
other account in order to cover checks or drafts drawn upon the
institution or to maintain a specified balance in, or to make periodic
transfers to such accounts, except accounts described in
§ 204.2(d)(2), but including accounts authorized by
12 U.S.C. 371a (automatic
transfer accounts or ATS accounts).
{{12-31-96 p.7578}}
(4) Deposits or accounts on which the depository institution has
reserved the right to require at least seven days' written notice prior
to withdrawal or transfer of any funds in the account and under the
terms of which, or by practice of the depository institution, the
depositor is permitted or authorized to make more than six withdrawals
per month or statement cycle (or similar period) of at least four weeks
for purposes of transferring funds to another account of the depositor
at the same institution (including "transaction account") or for
making payment to a third party by means of a preauthorized transfer,
or telephonic (including data transmission) agreement, order or
instruction, except accounts described in § 204.2(d)(2). An account
that authorizes more than six such withdrawals in a calendar month, or
statement cycle (or similar period) of at least four weeks, is a
"transaction account" whether or not more than six such transfers
are made during such period. A "preauthorized transfer" includes
any arrangement by the depository institution to pay a third party from
the account of a depositor upon written or oral instruction (including
an order received through an automated clearing house (ACH)), or any
arrangement by a depository institution to pay a third party from the
account of the depositor at a predetermined time or on a fixed
schedule. Such an account is not a "transaction account" by
virtue of an arrangement that permits transfers for the purpose of
repaying loans and associated expenses at the same depository
institution (as originator or servicer) or that permits transfers of
funds from this account to another account of the same depositor at the
same institution or permits withdrawals (payments directly to the
depositor) from the account when such transfers or withdrawals are made
by mail, messenger, automated teller machine or in person or when such
withdrawals are made by telephone (via check mailed to the depositor)
regardless of the number of such transfers or withdrawals.
(5) Deposits or accounts maintained in connection with an
arrangement that permits the depositor to obtain credit directly or
indirectly through the drawing of a negotiable or nonnegotiable check,
draft, order or instruction or other similar device (including
telephone or electronic order or instruction) on the issuing
institution that can be used for the purpose of making payments or
transfers to third persons or others or to a deposit account of the
depositor.
(6) All deposits other than time and savings deposits.
(f)(1) Nonpersonal time deposit means:
(i) A time deposit, including an MMDA or any other savings
deposit, representing funds in which any beneficial interest is held by
a depositor which is not a natural person;
(ii) A time deposit, including an MMDA or any other savings
deposit, that represents funds deposited to the credit of a depositor
that is not a natural person, other than a deposit to the credit of a
trustee or other fiduciary if the entire beneficial interest in the
deposit is held by one or more natural persons;
(iii) A transferable time deposit. A time deposit is transferable
unless it contains a specific statement on the certificate, instrument,
passbook, statement or other form representing the account that it is
not transferable. A time deposit that contains a specific statement
that it is not transferable is not regarded as transferable even if the
following transactions can be affected: a pledge as collateral for a
loan, a transaction that occurs due to circumstances arising from
death, incompetency, marriage, divorce, attachment, or otherwise by
operation of law or a transfer on the books or records of the
institution; and
(iv) A time deposit represented by a promissory note, an
acknowledgment of advance, or similar obligation described in section
204.2(a)(1)(vii) that is issued to, or any bankers' acceptance (other
than the type described in 12 U.S.C. 372) of the depository institution
held by:
(A) Any office located outside the United States of another
depository institution or Edge or Agreement corporation organized under
the laws of the United States;
(B) Any office located outside the United States of a foreign
bank;
{{12-31-96 p.7579}}
(C) A foreign national government, or an agency or
instrumentality thereof, 5
engaged principally in activities which are ordinarily performed in the
United States by governmental entities;
(D) An international entity of which the United States is a
member; or
(E) Any other foreign, international, or supranational entity
specifically designated by the Board. 6
(2) Nonpersonal time deposit does not include
nontransferable time deposits to the credit of or in which the entire
beneficial interest is held by an individual pursuant to an individual
retirement account or Keogh (H.R. 10) plan under 26 U.S.C. 408, 401, or
nontransferable time deposits held by an employer as part of an
unfunded deferred-compensation plan established pursuant to subtitle D
of the Revenue Act of 1978 (Pub. L. 95--600, 92 Stat. 2763), or a
"401(k) plan" under 26 U.S.C. 401(k).
(g) Natural person means an individual or a sole
proprietorship. The term does not mean a corporation owned by an
individual, a partnership or other association.
(h) Eurocurrency liabilities means: (1) For a
depository institution or an Edge or Agreement corporation organized
under the laws of the United States, the sum, if positive, of the
following:
(i) Net balances due to its non-United States offices and its
international banking facilities ("IBFs") from its United States
offices;
(ii)(A) For a depository institution organized under the laws of
the United States, assets (including participations) acquired from its
United States offices, and held by its non-United States offices, by
its IBF, or by non-United States offices of an affiliated Edge or
Agreement corporation; 7
or
(B) For an Edge or Agreement corporation, assets (including
participations) acquired from its United States offices and held by its
non-United States offices, by its IBF, by non-United States offices of
its U.S. or foreign parent institution, or by non-United States offices
of an affiliated Edge or Agreement corporation; and
(iii) Credit outstanding from its non-United States offices to
United States residents (other than assets acquired and net balances
due from its United States offices), except credit extended (A) from
its non-United States offices in the aggregate amount of $100,000 or
less to any United States resident, (B) by a non-United States office
that at no time during the computation period had credit outstanding to
United States residents exceeding $1 million, (C) to an international
banking facility, or (D) to an institution that will be maintaining
reserves on such credit pursuant to this part. Credit extended from
non-United States offices or from IBFs to a foreign branch, office,
subsidiary, affiliate of other foreign establishment ("foreign
affiliate") controlled by one or more domestic corporations is not
regarded as credit extended to a United States resident if the proceeds
will be used to finance the operations outside the United States of the
borrower or of other foreign affiliates of the controlling domestic
corporation(s).
(2) For a United States branch or agency of a foreign bank, the
sum, if positive, of the following:
(i) Net balances due to its foreign bank (including offices
thereof located outside the United States) and its international
banking facility after deducting an amount equal to 8 percent of the
following: the United States branch's or agency's total assets less the
sum of (A) cash items in process of collection; (B) unposted debits;
(C) demand balances due from depository institutions organized under
the laws of the United States and from other foreign banks; (D)
balances due from foreign central banks; and (E) positive net balances
due from its IBF, its foreign bank, and the foreign bank's United
States and non-United States offices; and
{{12-31-96 p.7580}}
(ii) Assets (including participations) acquired from the United
States branch or agency (other than assets required to be sold by
federal or state supervisory authorities) and held by its foreign bank
(including offices thereof located outside the United States), by its
parent holding company, by non-United States offices or an IBF of an
affiliated Edge or Agreement corporation, or by its
IBFs. 8
(i)(1) Cash item in process of collection means:
(i) Checks in the process of collection, drawn on a bank or other
depository institution that are payable immediately upon presentation
in the United States, including checks forwarded to a Federal Reserve
bank in process of collection and checks on hand that will be presented
for payment or forwarded for collection on the following business day;
(ii) Government checks drawn on the Treasury of the United States
that are in the process of collection; and
(iii) Such other items in the process of collection, that are
payable immediately upon presentation in the United States and that are
customarily cleared or collected by depository institutions as cash
items, including:
(A) Drafts payable through another depository institution;
(B) Redeemed bonds and coupons;
(C) Food coupons and certificates;
(D) Postal and other money orders, and traveler's checks;
(E) Amounts credited to deposit accounts in connection with
automated payment arrangements where such credits are made one business
day prior to the scheduled payment date to insure that funds are
available on the payment date;
(F) Commodity or bill of lading drafts payable immediately upon
presentation in the United States;
(G) Returned items and unposted debits; and
(H) Broker security drafts.
(2) "Cash item in process of collection" does not include
items handled as noncash collections and credit card sales slips and
drafts.
(j) Net transaction accounts means the total amount of a
depository institution's transaction accounts less the deductions
allowed under the provisions of § 204.3.
(k)(1) Vault cash means United States currency and coin
owned and held by a depository institution that may, at any time, be
used to satisfy depositors' claims.
(2) Vault cash includes United States currency and coin in
transit to a Federal Reserve bank or a correspondent depository
institution for which the reporting depository institution has not yet
received credit, and United States currency and coin in transit from a
Federal Reserve bank or a correspondent depository institution when the
reporting depository institution's account at the Federal Reserve or
correspondent bank has been charged for such shipment.
(3) Silver and gold coin and other currency and coin whose
numismatic or bullion value is substantially in excess of face value is
not vault cash for purposes of this part.
(l) Pass through account means a
balance maintained by a depository institution that is not a member
bank, by a U.S. branch or agency of a foreign bank, or by an Edge or
Agreement corporation, (1) in an institution that maintains required
reserve balances at a Federal Reserve bank, (2) in a Federal Home Loan
bank, (3) in the National Credit Union Administration Central Liquidity
Facility, or (4) in an institution that has been authorized by the
Board to pass through required reserve balances if the institution,
Federal Home Loan bank, or National Credit Union Administration Central
Liquidity Facility maintains the funds in the form of a balance in a
Federal Reserve bank of which it is a member or at which it maintains
an account in accordance with rules and regulations of the Board.
(m)(1) Depository institution means:
(i) Any insured bank as defined in section 3 of the Federal
Deposit Insurance Act (12 U.S.C.
1813(h)) or any bank that is eligible to apply to become an
insured bank under section 5 of such Act
(12 U.S.C. 1815);
{{6-30-99 p.7581}}
(ii) Any savings bank or mutual savings bank as defined in
section 3 of the Federal Deposit Insurance Act
(12 U.S.C. 1813(f),
(g));
(iii) Any insured credit union as defined in section 101 of the
Federal Credit Union Act (12 U.S.C. 1752(7)) or any credit union that
is eligible to apply to become an insured credit union under section
201 of such Act (12 U.S.C. 1781);
(iv) Any member as defined in section 2 of the Federal Home Loan
Bank Act (12 U.S.C. 1422(4)); and
(v) Any insured institution as defined in section 401 of the
National Housing Act (12 U.S.C. 1724(a)) or any institution which is
eligible to apply to become an insured institution under section 403 of
such Act (12 U.S.C. 1726).
(2) Depository institution does not include international
organizations such as the World Bank, the Inter-American Development
Bank, and the Asian Development Bank.
(n) Member bank means a depository institution that is
a member of the Federal Reserve System.
(o) Foreign bank means any bank or other similar
institution organized under the laws of any country other than the
United States or organized under the laws of Puerto Rico, Guam,
American Samoa, the Virgin Islands, or other territory or possession of
the United States.
(p) [Reserved]
(q) Affiliate includes any corporation, association, or
other organization:
(1) Of which a depository institution, directly or indirectly,
owns or controls either a majority of the voting shares or more than 50
percent of the numbers of shares voted for the election of its
directors, trustees, or other persons exercising similar functions at
the preceding election, or controls in any manner the election of a
majority of its directors, trustees, or other persons exercising
similar functions;
(2) Of which control is held, directly or indirectly, through
stock ownership or in any other manner, by the shareholders of a
depository institution who own or control either a majority of the
shares of such depository institution or more than 50 percent of the
number of shares voted for the election of directors of such depository
institution at the preceding election, or by trustees for the benefit
of the shareholders of any such depository institution;
(3) Of which a majority of its directors, trustees, or other
persons exercising similar functions are directors of any one
depository institution; or
(4) Which owns or controls, directly or indirectly, either a
majority of the shares of capital stock of a depository institution or
more than 50 percent of the number of shares voted for the election of
directors, trustees, or other persons exercising similar functions of a
depository institution at the preceding election, or controls in any
manner the election of a majority of the directors, trustees, or other
persons exercising similar functions of a depository institution, or
for the benefit of whose shareholders or members all or substantially
all the capital stock of a depository institution is held by trustees.
(r) United States means the States of the United States
and the District of Columbia.
(s) United States resident means (1) any individual
residing (at the time of the transaction) in the United States; (2) any
corporation, partnership, association or other entity organized in the
United States ("domestic corporation"); and (3) any branch or
office located in the United States of any entity that is not organized
in the United States.
(t) Any deposit that is payable only at an office located
outside the United States means (1) a deposit of a United States
resident 9
that is a denomination of $100,000 or more, and as to which the
depositor is entitled, under the agreement with the institution, to
demand payment only outside the United States or (2) a deposit of a
person who is not a United States resident9 as to which the
depositor is entitled, under the agreement with the institution, to
demand payment only outside the United States.
{{6-30-99 p.7582}}
[Codified to 12 C.F.R. § 204.2]
[Section 204.2 amended at 45 Fed. Reg. 73015, November 4, 1980,
effective November 13, 1980; 45 Fed. Reg. 79749, December 2, 1980,
effective December 11, 1980; 45 Fed. Reg. 81537, December 11, 1980,
effective December 1, 1980; 46 Fed. Reg. 22178, April 16, 1981,
effective April 30, 1981; 46 Fed. Reg. 27092, May 18, 1981, effective
May 14, 1981; 46 Fed. Reg. 32429, June 23, 1981, effective December 3,
1981; 47 Fed. Reg. 38105, August 30, 1982, effective September 1, 1982;
47 Fed. Reg. 44994, October 13, 1982, effective October 5, 1982; 47
Fed. Reg. 52693, November 23, 1982, effective October 5, 1982; 47 Fed.
Reg. 55208, December 8, 1982, effective December 14, 1982; 47 Fed. Reg.
58219, December 30, 1982; 48 Fed. Reg. 224, January 4, 1983, effective
January 5, 1983; 48 Fed. Reg. 28973, June 24, 1983, effective June 20,
1983; 48 Fed. Reg. 46263, October 12, 1983, effective October 1, 1983;
51 Fed. Reg. 9632, March 20, 1986, effective April 1, 1986; 52 Fed.
Reg. 47694, December 16, 1987, effective December 31, 1987; 55 Fed.
Reg. 50541, December 7, 1990, effective December 13, 1990; 56 Fed. Reg.
15494, April 17, 1991, effective April 24, 1991; 57 Fed. Reg. 40598,
September 4, 1992; 61 Fed. Reg. 69025, December 31, 1996, effective
April 1, 1997; 63 Fed. Reg. 64841, November 24,
1998]
§ 204.3 Computation and maintenance.
(a) Maintenance of required reserves. A depository
institution, a U.S. branch or agency of a foreign bank, and an Edge or
Agreement corporation shall maintain reserves against its deposits and
Eurocurrency liabilities in accordance with the procedures prescribed
in this section and § 204.4 and the ratios prescribed in
§ 204.9. Penalties shall be
assessed for deficiencies in required reserves in accordance with the
provisions of § 204.7. Every depository institution, U.S. branch or
agency of a foreign bank, and Edge or Agreement corporation shall file
reports of deposits in accordance with the instructions of the Board,
based on the level of its deposits and reservable liabilities
consistent with the Board's need for data to carry out its
responsibility to monitor and control monetary and credit aggregates.
For purposes of this part, the obligations of a majority owned (50% or
more) U.S. subsidiary (except an Edge or Agreement corporation) of a
depository institution shall be regarded as obligations of the parent
depository institution.
(1) United States branches and agencies of foreign
banks.
(i) A foreign bank's United States branches and agencies
operating within the same state and within the same Federal Reserve
district shall prepare and file a report of deposits on an aggregated
basis.
(ii) United States branches and agencies of the same foreign bank
shall, if possible, assign the low reserve tranche on transaction
accounts (§ 204.9(a)) to only
one office or to a group of offices filing a single aggregated report
of deposits. If the low reserve tranche cannot be fully utilized by a
single office or by a group of offices filing a single report of
deposits, the unused portion of the tranche may be assigned to other
offices of the same foreign bank until the amount of the tranche is
exhausted. The foreign bank shall determine this assignment subject to
the restriction that if a portion of the tranche is assigned to an
office in a particular state, any unused portion must first be assigned
to other offices located within the same state and within the same
Federal Reserve district, that is, to other offices included on the
same aggregated report of deposits. If necessary in order to avoid
under-utilization of the low reserve tranche, the allocation may be
changed at the beginning of a calendar month. Under other
circumstances, the low reserve tranche may be reallocated at the
beginning of a calendar year.
(2) Edge and Agreement corporations.
(i) An Edge or Agreement corporation's offices operating within
the same state and within the same Federal Reserve district shall
prepare and file a report of deposits on an aggregated
basis.
{{4-30-98 p.7583}}
(ii) An Edge or Agreement corporation shall, if possible, assign
the low reserve tranche on transaction accounts (§ 204.9(a)) to only
one office or to a group of offices filing a single aggregated report
of deposits. If the low reserve tranche cannot be fully utilized by a
single office or by a group of offices filing a single report of
deposits, the unused portion of the tranche may be assigned to other
offices of the same institution until the amount of the tranche is
exhausted. An Edge or Agreement corporation shall determine this
assignment subject to the restriction that if a portion of the tranche
is assigned to an office in a particular state, any unused portion must
first be assigned to other offices located within the same state and
within the same Federal Reserve district, that is, to other offices
included on the same aggregated report of deposits. If necessary in
order to avoid under-utilization of the low reserve tranche, the
allocation may be changed at the beginning of a calendar month. Under
other circumstances, the low reserve tranche may be reallocated at the
beginning of a calendar year.
(3) Allocation of exemption from reserve requirements.
A depository institution, United States branches and agencies of
the same foreign bank, or an Edge or Agreement corporation shall, if
possible, assign the reserve requirement exemption of § 204.9(a) to
only one office or to a group of offices filing a single aggregated
report of deposits. If the reserve requirement exemption cannot be
fully utilized by a single office or by a group of offices filing a
single report of deposits, the unused portion of the exemption may be
assigned to other offices of the same institution until the amount of
the exemption or reservable liabilities is exhausted. A depository
institution, foreign bank, or Edge or Agreement corporation shall
determine this assignment subject to the restriction that if a portion
of the exemption is assigned to an office in a particular state, any
unused portion must first be assigned to other offices located within
the same state and within the same Federal Reserve district, that is,
to other offices included on the same aggregated report of deposits.
The exemption may be reallocated at the beginning of a calendar year,
or, if necessary to avoid underutilization of the exemption, at the
beginning of a calendar month. The amount of the reserve requirement
exemption allocated to an office or group of offices may not exceed the
amount of the low reserve tranche allocated to such office or offices
under this paragraph.
(b) Form and location of reserves. (1) A depository
institution, a U.S. branch or agency of a foreign bank, and an Edge or
agreement corporation shall hold reserves in the form of vault cash, a
balance maintained directly with the Federal Reserve Bank in the
Federal Reserve District in which it is located, or a pass-through
account. Reserves held in the form of a pass-through account shall be
considered to be a balance maintained with a Federal Reserve Bank.
(2)(i) For purposes of this section, a depository institution is
located in the Federal Reserve District that contains the location
specified in the institution's charter or organizing certificate, or,
if no such location is specified, the location of its head office,
unless otherwise determined by the Board under paragraph (b)(2)(ii) of
this section.
(ii) If the location specified in paragraph (b)(2)(i) of this
section, in the Board's judgment, is ambiguous, would impede the
ability of the Board or the Federal Reserve Banks to perform their
functions under the Federal Reserve Act, or would impede the ability of
the institution to operate efficiently, the Board will determine the
Federal Reserve District in which the institution is located, after
consultation with the institution and the relevant Federal Reserve
Banks. The relevant Federal Reserve Banks are the Federal Reserve Bank
whose District contains the location specified in paragraph (b)(2)(i)
of this section and the Federal Reserve Bank in whose District the
institution is proposed to be located. In making this determination,
the Board will consider any applicable laws, the business needs of the
institution, the location of the institution's head office, the
locations where the institution performs its business, and the
locations that would allow the institution, the Board, and the Federal
Reserve Banks to perform their functions efficiently and effectively.
(c) Computation of required reserves for institutions that
report on a weekly basis. (1) Required reserves are computed on
the basis of daily average balances of deposits and
{{4-30-98 p.7584}}Eurocurrency liabilities
during a 14-day period ending every second Monday (the computation
period). Reserve requirements are computed by applying the ratios
prescribed in § 204.9 to the classes of deposits and Eurocurrency
liabilities of the institution. In determining the reserve balance that
is required to be maintained with the Federal Reserve, the average
daily vault cash held during the computation period is deducted from
the amount of the institution's required reserves.
(2) The reserve balance that is required to be maintained with
the Federal Reserve shall be maintained during a 14-day period (the
``maintenance period'') that begins on the third Thursday following
the end of a given computation period.
(3) In determining the reserve balance that is required to be
maintained with the Federal Reserve, the daily average vault cash held
during the computation period that ended 3 days prior to the beginning
of the maintenance period is deducted from the amount of the
institution's required reserves.
(d) Computation of required reserves for institutions that
report on a quarterly basis. For a depository institution that is
permitted to report quarterly; required reserves are computed on the
basis of the depository institution's daily average deposit balances
during a seven-day computation period that begins on the third Tuesday
of March, June, September, and December. In determining the reserve
balance that such a depository institution is required to maintain with
the Federal Reserve, the daily average vault cash held during the
computation period is deducted from the amount of the institution's
required reserves. The reserve balance that is required to be
maintained with the Federal Reserve shall be maintained during a
corresponding period that begins on the fourth Thursday following the
end of the institution's computation period and ends on the fourth
Wednesday after the close of the institution's next computation period.
(e) Computation of transaction accounts. Overdrafts in
demand deposit or other transaction accounts are not to be treated as
negative demand deposits or negative transaction accounts and shall not
be netted since overdrafts are properly reflected on an institution's
books as assets. However, where a customer maintains multiple
transaction accounts with a depository institution, overdrafts in one
account pursuant to a bona fide cash management arrangement
are permitted to be netted against balances in other related
transaction accounts for reserve requirement purposes.
(f) Deductions allowed in computing reserves. (1) In
determining the reserve balance required under this part, the amount of
cash items in process of collection and balances subject to immediate
withdrawal due from other depository institutions located in the United
States (including such amounts due from United States branches and
agencies of foreign banks and Edge and agreement corporations) may be
deducted from the amount of gross transaction accounts. The amount that
may be deducted may not exceed the amount of gross transaction
accounts.
(2) United States branches and agencies of a foreign bank may not
deduct balances due from another United States branch or agency of the
same foreign bank, and United States offices of an Edge or Agreement
corporation may not deduct balances due from another United States
office of the same Edge corporation.
(3) Balances "due from other depository institutions" do
not include balances due from Federal Reserve banks, pass-through
accounts, or balances (payable in dollars or otherwise) due from
banking offices located outside the United States. An institution
exercising fiduciary powers may not include in balances due from other
depository institutions amounts of trust funds deposited with other
banks and due to it as a trustee or other fiduciary.
(g) Availability of cash items as reserves. Cash items
forwarded to a Federal Reserve bank for collection and credit shall not
be counted as part of the reserve balance to be carried with the
Federal Reserve until the expiration of the time specified in the
appropriate time schedule established under Regulation J,
"Collection of Checks and Other Items and Transfers of Funds" (12
CFR Part 210). If a depository institution draws against items before
that time, the charge will be made to its reserve account if the
balance is
{{6-30-97 p.7584.01}}sufficient to pay it; any resulting
impairment of reserve balances will be subject to the penalties
provided by law and by this part. However, the Federal Reserve bank
may, at its discretion, refuse to permit the withdrawal or other use of
credit given in a reserve account for any time for which the Federal
Reserve bank has not received payment in actually and finally collected
funds.
(h) Carryover of excesses or deficiencies. Any excess
or deficiency in a depository institution's account that is held
directly or indirectly with a Federal Reserve Bank shall be carried
over and applied to that account in the next maintenance period as
specified in this paragraph. The amount of any such excess or
deficiency that is carried over shall not exceed the greater of:
(1) The amount obtained by multiplying .04 times the sum of the
depository institution's required reserves and the depository
institution's required clearing balance, if any, and then subtracting
from this product the depository institution's required charge-free
band, if any; or
(2) $50,000, minus the depository institution's required
charge-free band, if any. Any carryover not offset during the next
period may not be carried over to subsequent periods.
(i) Pass-through rules--
(1) Procedure. (i) A nonmember depository institution
required to maintain reserve balances ("respondent") may select
only one institution to pass through its required reserves. Eligible
institutions through which respondent required
{{12-31-96 p.7585}}reserve balances may be passed
("correspondents") are Federal Home Loan banks, the National
Credit Union Administration Central Liquidity Facility, and depository
institutions that maintain required reserve balances at a Federal
Reserve office. In addition, the Board reserves the right to permit
other institutions, on a case-by-case basis, to serve as pass-through
correspondents. The correspondent chosen must subsequently pass through
the required reserve balances of its respondents directly to the
appropriate Federal Reserve office. The correspondent placing funds
with the Federal Reserve on behalf of respondents will be responsible
for reserve account maintenance as described in Subparagraphs (3) and
(4) of this paragraph.
(ii) Respondent depository institutions or pass-through
correspondents may institute, terminate, or change pass-through
arrangements for the maintenance of required reserve balances by
providing all documentation required for the establishment of the new
arrangement and/or termination of the existing arrangement to the
Federal Reserve bank in whose territory the respondent is located. The
time period required for such a change to be effected shall be
specified by each Reserve bank in its discretion.
(iii) U.S. branches and agencies of foreign banks and Edge and
Agreement corporations may (a) act as pass-through
correspondents for any nonmember institution required to maintain
reserves or (b) pass their own required reserve balances
through correspondents. In accordance with the provision set forth in
subparagraph (3) of this paragraph, the U.S. branches and agencies of a
foreign bank or offices of an Edge and Agreement corporation filing a
singel aggregated report of deposits may designate any one of the other
U.S. offices of the same institution to serve as a pass-through
correspondent for all of the offices filing such a single aggregated
report of deposits.
(2) Reports. (i) Every depository institution that
maintains transaction accounts or nonpersonal time deposits is required
to file its report of deposits (or any other required form or
statement) directly with the Federal Reserve banks of its district,
regardless of the manner in which it chooses to maintain required
reserve balances.
(ii) The Federal Reserve bank receiving such reports shall notify
the reporting depository institution of its reserve requirements. Where
a pass-through arrangement exists, the Reserve bank will also notify
the correspondent passing respondent reserve balances through to the
Federal Reserve of its respondent's required reserve balances.
(iii) The Federal Reserve will not hold a correspondent
responsible for guaranteeing the accuracy of the reports of deposits
submitted by its respondents to their local Federal Reserve banks.
(3) Account maintenance. (i) A correspondent that
passes through required reserve balances of respondents whose main
offices are located in the same Federal Reserve territory in which the
main office of the correspondent is located shall have the option of
maintaining such required reserve balances in one of two ways:
(a) A correspondent may maintain such balances, along with
the correspondent's own required reserve balances, in a single
commingled account at the Federal Reserve bank office in whose
territory the correspondent's main office is located, of (b)
A correspondent may maintain its own required reserve balance in an
account with the Federal Reserve bank office in whose territory its
main office is located. The correspondent, in addition, would maintain
in a separate commingled account the required reserve balances passed
through the respondents whose main offices are located in the same
Federal Reserve territory as that of the main office of the
correspondent.
(ii) A correspondent that passes thorugh required reserve
balances of respondents whose main offices are located outside the
Federal Reserve territory in which the main office of the correspondent
is located shall maintain such required reserve balances in a separate
commingled account at each Federal Reserve office in whose territory
the main office of such respondents are located.
(iii) A Reserve bank may, at its discretion, require a
pass-through correspondent to consolidate in a single account the
reserve balances of all of its respondents whose main offices are
located in any territory of that Federal Reserve district.
{{12-31-96 p.7586}}
(4) Responsibilities of parties. (i) Each individual
depository institution is responsible for maintaining its required
reserve balance with the Federal Reserve bank either directly or
through a pass-through correspondent.
(ii) A pass-through correspondent shall be responsible for
assuring the maintenance of the appropriate aggregate level of its
respondents' required reserve balances. A Reserve bank will compare the
total reserve balance required to be maintained in each reserve account
with the total actual reserve balance held in such reserve account for
purposes of determining required reserve deficiencies, imposing or
waiving charges for deficiencies in required reserves, and for other
reserve maintenance purposes. A charge for a deficiency in the
aggregate level of the required reserve balance will be imposed by the
Reserve bank on the correspondent maintaining the account.
(iii) Each correspondent is required to maintain detailed records
for each of its respondents in a manner that permits Reserve banks to
determine whether the respondent has provided a sufficient required
reserve balance to the correspondent. A correspondent passing through a
respondent's reserve balance shall maintain records and make such
reports as the Federal Reserve System requires in order to insure the
correspondent's compliance with its responsibilities for the
maintenance of a respondent's reserve balance. Such records shall be
available to the Federal Reserve banks as required.
(iv) The Federal Reserve bank may terminate any pass-through
relationship in which the correspondent is deficient in its
recordkeeping or other responsibilities.
(v) Interest paid on supplemental reserves (if such reserves are
required under section 204.6 of this part) held by respondent(s) will
be credited to the commingled reserve account(s) maintained by the
correspondent.
(5) Services. (i) A depository institution
maintaining its reserve balances on a pass-through basis may obtain
available Federal Reserve System services directly from its local
Federal Reserve office. For this purpose, the pass-through account in
which a respondent's required reserve balance is maintained may be used
by the respondent for the posting of entries arising from transactions
involving the use of such Federal Reserve services, if the posting of
these types of transactions has been authorized by the correspondent
and the Federal Reserve. For example, access to the wire transfer,
securities transfer, and settlement services that involve charges to
the commingled reserve account at the Reserve bank will require
authorization from the correspondent and the Reserve bank for the type
of transaction that is occurring.
(ii) In addition, in obtaining Federal Reserve services,
respondents maintaining their required reserves on a pass-through basis
may choose to have entries arising from the use of Federal Reserve
services posted to: (a) With the prior authorization of all
parties concerned, the reserve account maintained by any institution at
a Federal Reserve bank by the (b) an account maintained for
clearing purposes at a Federal Reserve bank by the respondent.
(iii) Accounts at Federal Reserve banks consisting only of
respondents' reserve balances that are passed through by a
correspondent to a Federal Reserve bank may be used only for
transactions of respondents. A correspondent will not be permitted to
use such pass-through accounts for purposes other than serving its
respondents' needs.
[Codified to 12 C.F.R. § 204.3]
[Section 204.3 amended at 45 Fed. Reg. 58100, September 2,
1980, effective November 13, 1980; 45 Fed. Reg. 73015, November 4,
1980, effective November 13, 1980; 45 Fed. Reg. 81537, December 11,
1980, effective December 1, 1980; 46 Fed. Reg. 10140, February 2, 1981,
effective January 15, 1981; 46 Fed. Reg. 32430, June 23, 1981,
effective December 3, 1981; 47 Fed. Reg. 14482, April 5, 1982,
effective April 28, 1982; 47 Fed. Reg. 44712, October 12, 1982,
effective February 2, 1984; 47 Fed. Reg. 55206, December 8, 1982,
effective December 9, 1982; 48 Fed. Reg. 2314, January 19, 1983,
effective January 13, 1983; 48 Fed. Reg. 17335, April 22, 1983,
effective April 28, 1983; 51 Fed. Reg. 9635, March 20, 1986, effective
April 1, 1986; 55 Fed. Reg. 50541, December 7, 1990,
effective
{{10-31-08 p.7586.01}}December 13, 1990; 57
Fed. Reg. August 25, 1992, effective September 3, 1992 and November 19,
1992; 61 Fed. Reg. 69025, December 31, 1996, effective April 1, 1997;
62 Fed. Reg. 34616, June 27, 1997, effective October 1, 1997; 63 Fed.
Reg. 15071, March 30, 1998, effective July 30, 1998]
§ 204.4 [Reserved]
§ 204.5 Emergency reserve requirement.
(a) Finding by Board. The Board may impose, after
consulting with the appropriate committees of Congress, additional
reserve requirements on depository institutions at any ratio on any
liability upon a finding by at least five members of the Board that
extraordinary circumstances require such action.
(b) Term. Any action taken under this section shall be
valid for a period not exceeding 180 days, and may be extended for
further periods of up to 180 days each by affirmative action of at
least five members of the Board for each extension.
(c) Reports to Congress. The Board shall transmit
promptly to Congress a report of any exercise of its authority under
this paragraph and the reasons for the exercise of authority.
(d) Reserve requirements. At present, there are no
emergency reserve requirements imposed under this section.
[Codified to 12 C.F.R.
§ 204.5]
§ 204.6 Supplemental reserve requirement.
(a) Finding by Board. Upon the affirmative vote of at
least five members of the Board and after consultation with the Board
of Directors of the Federal Deposit Insurance Corporation, the Federal
Home Loan Bank Board, and the National Credit Union Administration
Board, the Board may impose a supplemental reserve requirement on every
depository institution of not more than 4 percent of its total
transaction accounts. A supplemental reserve requirement may be imposed
if:
(1) The sole purpose of the requirement is to increase the amount
of reserves maintained to a level essential for the conduct of monetary
policy;
(2) The requirement is not imposed for the purpose of reducing
the cost burdens resulting from the imposition of basic reserve
requirements;
(3) Such requirement is not imposed for the purpose of increasing
the amount of balances needed for clearing purposes; and
(4) On the date on which supplemental reserve requirements are
imposed, the total amount of basic reserve requirements is not less
than the amount of reserves that would be required on transaction
accounts and nonpersonal time deposits under the initial reserve ratios
established by the Monetary Control Act of 1980 (Pub. L. 96-221) in
effect on September 1, 1980.
(b) Term. (1) If a supplemental reserve requirement
has been imposed for a period of one year or more, the Board shall
review and determine the need for continued maintenance of supplemental
reserves and shall transmit annual reports to the Congress regarding
the need for continuing such requirement.
(2) Any supplemental reserve requirement shall terminate at the
close of the first 90-day period after the requirement is imposed
during which the average amount of supplemental reserves required are
less than the amount of reserves which would be required if the ratios
in effect on September 1, 1980, were applied.
(c) Earnings Participation Account. A depository
institution's supplemental reserve requirement shall be maintained by
the Federal Reserve banks in an Earnings Participation Account. Such
balances shall receive earnings to be paid by the Federal Reserve banks
during each calendar quarter at a rate not to exceed the rate earned on
the securities portfolio of the Federal Reserve System during the
previous calendar quarter. Additional rules and regulations may be
prescribed by the Board concerning the payment of earnings on Earnings
Participation Accounts by Federal Reserve banks.
{{10-31-08 p.7586.02}}
(d) Report to Congress. The Board shall transmit
promptly to the Congress a report stating the basis for exercising its
authority to require a supplemental reserve under this section.
(e) Reserve requirements. At present, there are no
supplemental reserve requirements imposed under this section.
[Codified to 12 C.F.R. § 204.6]
[Section 204.6 amended at 45 Fed. Reg. 81537, December 11, 1980,
effective December 1, 1980]
§ 204.7 Reserve deficiencies.
(a) Charges for deficiencies--(1) Assessment of
charges. Deficiencies in a depository institution's required
reserve balance, after application of the carryover provided in
§ 204.3(h) are subject to reserve deficiency charges. Federal Reserve
Banks are authorized to assess charges for deficiencies in required
reserves at a rate of 1 percentage point per year above the primary
credit rate, as provided in § 201.51(a) of this chapter, in effect
for borrowings from the Federal Reserve Bank on the first day of the
calendar month in which the deficiencies occurred. Charges shall be
assessed on the basis of daily average deficiencies during each
maintenance period. Reserve Banks may, as an alternative to levying
monetary charges, after consideration of the circumstances involved,
permit a depository institution to eliminate deficiencies in its
required reserve balance by maintaining additional reserves during
subsequent reserve maintenance periods.
(2) Waivers. (i) Reserve Banks may waive the charges
for reserve deficiencies except when the deficiency arises out of a
depository institution's gross negligence or conduct that is
inconsistent with the principles and purposes of reserve requirements.
Each Reserve Bank has adopted guidelines that provide for waivers of
small charges. The
{{12-31-02 p.7586.03}}guidelines also provide
for waiving the charge once during a two-year period for any deficiency
that does not exceed a certain percentage of the depository
institution's required reserves. Decisions by Reserve Banks to waive
charges in other situations are based on an evaluation of the
circumstances in each individual case and the depository institution's
reserve maintenance record. If a depository institution has
demonstrated a lack of due regard for the proper maintenance of
required reserves, the Reserve Bank may decline to exercise the waiver
privilege and assess all charges regardless of amount or reason for the
deficiency.
(ii) In individual cases, where a federal supervisory authority
waives a liquidity requirement, or waives the penalty for failing to
satisfy a liquidity requirement, the Reserve Bank in the District where
the involved depository institution is located shall waive the reserve
requirement imposed under this part for such depository institution
when requested by the federal supervisory authority involved.
[Codified to 12 C.F.R. § 204.7]
[Section 204.7 amended at 56 Fed. Reg. 15495, April 17,
1991, effective April 24, 1991; 61 Fed. Reg. 69025, December 31, 1996,
effective April 1, 1997; 67 Fed. Reg. 67787, November 7, 2002,
effective January 9, 2003]
§ 204.8 International banking facilities.
(a) Definitions. For purposes of this part, the
following definitions apply:
(1) "International banking facility" or "IBF"
means a set of asset and liability accounts segregated on the
books and records of a depository institution, United States branch or
agency of a foreign bank, or an Edge or Agreement corporation that
includes only international banking facility time deposits and
international banking facility extensions of credit.
(2) "International banking facility time deposit" or
"IBF time deposit" means a deposit, placement, borrowing or
similar obligation represented by a promissory note, acknowledgment of
advance, or similar instrument that is not issued in negotiable or
bearer form, and
(i)(A) That must remain on deposit at the IBF at least overnight;
and
(B) That is issued to
(1) Any office located outside the United
States of another depository institution organized under the laws of
the United States or of an Edge or Agreement corporation;
(2) Any office located outside the United
States of a foreign bank;
(3) A United States office or a non-United
States office of the entity establishing the IBF;
(4) Another IBF; or
(5) A foreign national government, or an agency
or instrumentality thereof, 10
engaged principally in activities which are ordinarily performed in the
United States by governmental entities; an international entity of
which the United States is a member; or any other foreign international
or supranational entity specifically designated by the
Board; 11
or
(ii)(A) That is payable
(1) On a specified date not less than two
business days after the date of deposit;
(2) Upon expiration of a specified period of
time not less than two business days after the date of deposit; or
(3) Upon written notice that actually is
required to be given by the depositor not less than two business days
prior to the date of withdrawal;
(B) That represents funds deposited to the credit of a non-United
States resident or a foreign branch, office, subsidiary, affiliate, or
other foreign establishment ("foreign
{{12-31-02 p.7586.04}}affiliate") controlled by one or
more domestic corporations provided that such funds are used only to
support the operations outside the United States of the depositor or of
its affiliates located outside the United States; and
(C) That is maintained under an agreement or arrangement under
which no deposit or withdrawal of less than $100,000 is permitted,
except that a withdrawal of less than $100,000 is permitted if such
withdrawal closes an account.
(3) "International banking facility extension of
credit" or "IBF loan" means any transaction where an IBF
supplies funds by making a loan, or placing funds in a deposit account.
Such transactions may be represented by a promissory note, security,
acknowledgment of advance, due bill, repurchase agreement, or any other
form of credit transaction. Such credit may be extended only to:
(i) Any office located outside the United States of another
depository institution organized under the laws of the United States or
of an Edge or Agreement corporation;
(ii) Any office located outside the United States of a foreign
bank;
(iii) A United States or a non-United States office of the
institution establishing the IBF;
(iv) Another IBF;
(v) A foreign national government, or an agency or
instrumentality thereof, 12
engaged principally in activities which are ordinarily performed in the
United States by governmental entities; an international entity of
which the United States is a member; or any other foreign international
or supranational entity specifically designated by the
Board; 13
or
(vi) A non-United States resident or a foreign branch, office,
subsidiary, affiliate or other foreign establishment ("foreign
affiliate") controlled by one or more domestic corporations provided
that the funds are used only to finance the operations outside the
United States of the borrower or of its affiliates located outside the
United States.
(b) Acknowledgment of use of IBF deposits and extensions of
credit. An IBF shall provide written notice to each of its
customers (other than those specified in § 204.8(a)(2)(i)(B) and
§ 204.8(a)(3)(i) through (v)) at the time a deposit relationship or a
credit relationship is first established that it is the policy of the
Board of Governors of the Federal Reserve System that deposits received
by international banking facilities may be used only to support the
depositor's operations outside the United States as specified in
§ 204.8(a)(2)(ii)(B) and that extensions of credit by IBFs may be
used only to finance operations outside of the United States as
specified in § 204.8(a)(3)(vi). In the case of loans to or deposits
from foreign affiliates of U.S. residents, receipt of such notice must
be acknowledged in writing whenever a deposit or credit relationship is
first established with the IBF.
(c) Exemption from reserve requirements. An institution
that is subject to the reserve requirements of this part is not
required to maintain reserves against its IBF time deposits or IBF
loans. Deposit-taking activities of IBFs are limited to accepting only
IBF time deposits and lending activities of IBFs are restricted to
making only IBF loans.
(d) Establishment of an international banking
facility. A depository institution, an Edge or Agreement
corporation or a United States branch or agency of a foreign bank may
establish an IBF in any location where it is legally authorized to
engage in IBF business. However, only one IBF may be established for
each reporting entity that is required to submit a Report of
Transaction Accounts, Other Deposits and Vault Cash (Form FR 2900).
(e) Notification to Federal Reserve. At least fourteen
days prior to the first reserve computation period that an institution
intends to establish an IBF it shall notify the Federal Reserve bank
of the district in which it is located of its intent. Such notification
shall include a statement of intention by the institution that it will
comply with the rules of this part concerning IBFs, including
restrictions on sources and uses of funds, and
{{12-31-08 p.7586.05}}
recordkeeping and accounting requirements. Failure to comply with the
requirements of this part shall subject the institution to reserve
requirements under this part or result in the revocation of the
institution's ability to operate an IBF.
(f) Recordkeeping requirements. A depository institution
shall segregate on its books and records the asset and liability
accounts of its IBF and submit reports concerning the operations of its
IBF as required by the Board.
[Codified to 12 C.F.R. § 204.8]
[Section 204.8 added at 46 Fed. Reg. 32429, June 23, 1981,
effective December 3, 1981; amended at 51 Fed. Reg. 9636, March 20,
1986, effective April 1, 1986; 61 Fed. Reg. 69025, December 31, 1996,
effective April 1, 1997]
§ 204.9 Reserve requirement ratios.
The following reserve requirement ratios are prescribed for all
depository institutions, banking Edge and agreement corporations, and
United States branches and agencies of foreign
banks:
Category |
Reserve
requirement |
Net transaction accounts: |
$0 to $10.3
million |
0 percent of amount. |
Over $10.3 million
and up to $44.4 million |
3 percent of
amount. |
Over 44.4 million |
$1,023,000 plus 10 percent of
amount over 44.4 million. |
|
Nonpersonal time
deposits |
0 percent. |
Eurocurrency liabilities |
0
percent.
|
[Codified to 12 C.F.R. § 204.9]
[Section 204.9 amended at 46 Fed. Reg. 32430, June 23,
1981, effective December 3, 1981; 46 Fed. Reg. 62053, December 22,
1981, effective December 31, 1981; 47 Fed. Reg. 18848, May 3, 1982,
effective April 29, 1982; 47 Fed. Reg. 55206, December 8, 1982,
effective December 9, 1982; 47 Fed. Reg. 55210, December 8, 1982,
effective December 30, 1982; 48 Fed. Reg. 12084, March 23, 1983,
effective March 31, 1983; 48 Fed. Reg. 46006, October 11, 1983,
effective October 6, 1983; 48 Fed. Reg. 54587, December 6, 1983,
effective January 12, 1984; 49 Fed. Reg. 44449, November 7, 1984,
effective January 1, 1985; 50 Fed. Reg. 50285, December 10, 1985,
effective December 31, 1985; 51 Fed. Reg. 43176, December 1, 1986,
effective December 30, 1986; 52 Fed. Reg. 46451, December 8, 1987,
effective December 15, 1987; 53 Fed. Reg. 49116, December 6, 1988; 54
Fed. Reg. 51012, December 12, 1989; 55 Fed. Reg. 50541, December 7,
1990, effective December 13, 1990; 55 Fed. Reg. 53100, December 26,
1990; 56 Fed. Reg. 60055, November 27, 1991, effective December 17,
1991; 57 Fed. Reg. 8060, March 6, 1992, effective April 2, 1992, 57
Fed. Reg. 56443, November 30, 1992, effective December 15, 1992; 58
Fed. Reg. 61802, November 23, 1993, effective December 14, 1993; 59
Fed. Reg. 60703, November 28, 1994, effective December 20, 1994; 60
Fed. Reg. 57911, November 24, 1995, effective December 19, 1995; 61
Fed. Reg. 60173, November 27, 1996, effective December 17, 1996; 61
Fed. Reg. 69025, December 31, 1996, effective April 1, 1997; 62 Fed.
Reg. 61622, November 19, 1997, effective December 16, 1997; 63 Fed.
Reg. 65662, November 30, 1998; 64 Fed. Reg. 53619, October 4, 1999,
effective November 3, 1999; 65 Fed. Reg. 69859, November 21, 2000,
effective December 21, 2000; 66 Fed. Reg. 53076, October 19, 2001,
effective November 19, 2001; 67 Fed. Reg. 62636, October 8, 2002,
effective November 7, 2002; 68 Fed. Reg. 57790, October 7, 2003,
effective November 6, 2003; 69 Fed. Reg. 60545, October 12, 2004,
effective November 12, 2004; 70 Fed. Reg. 58604, October 7,
2005,
{{12-31-08 p.7586.06}}effective November 7, 2005; 71
Fed. Reg. 62203, October 24, 2006, effective November 24, 2006; 72 Fed.
Reg. 55657, October 1, 2007, effective October 31, 2007; 73 Fed. Reg.
57490, October 3, 2008, effective November 3, 2008; Compliance dates
for depository institutions that report deposit data weekly, the new
low reserve tranche and reserve requirement exemption amount will apply
to the fourteen-day reserve computation period that begins Tuesday,
December 2, 2008, and the corresponding fourteen-day reserve
maintenance period that begins Thursday, January 1, 2009. For
depository institutions that report deposit data quarterly, the new low
reserve tranche and reserve requirement exemption amount will apply to
the seven-day reserve computation period that begins Tuesday, December
16, 2008, and the corresponding seven-day reserve maintenance period
that begins Thursday, January 15, 2009. For all depository
institutions, these 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 2009.]
§ 204.10 Payment of interest on balances.
(a) Payment of interest. The Federal Reserve Banks shall
pay interest on balances maintained at Federal Reserve Banks by or on
behalf of an eligible institution as provided in this section and under
such other terms and conditions as the Board may prescribe.
(b) Except as provided in paragraph (c) of this section, Federal
Reserve Banks shall pay interest at the following rates--
(1) For required reserve balances, at 1/4 percent; reserve
maintenance period less 10 basis points; and
(2) For excess balances, at 1/4 percent; or
(3) For required reserve balances or excess balances, at any
other rate or rates as determined by the Board from time to time.
(c) Pass-through balances. Any excess balance held by a
pass-through correspondent that is not an eligible institution is
deemed to be held on behalf of the pass-through correspondent's
respondents. A pass-through correspondent may pass back to its
respondent interest paid on balances held on behalf of that respondent.
Such a payment is not a payment of interest on a demand deposit for
purposes of Part 217 of this chapter (Regulation Q).
(d) Definitions. For purposes of this section--
(1) Clearing balance means the amount that an eligible
institution holds to satisfy a contractual clearing balance agreement
with a Federal Reserve Bank, in addition to any required reserve
balance.
(2) Eligible institution means--
(i) Any depository institution as described in § 204.1(c) of
this part;
(ii) Any trust company;
(iii) Any corporation organized under section 25A of the Federal
Reserve Act (12 U.S.C. 611 et seq.) or having an agreement
with the Board under section 25 of the Federal Reserve Act (12 U.S.C.
601 et seq.); and
(iv) Any branch or agency of a foreign bank (as defined in
section 1(b) of the International Banking Act of 1978, 12 U.S.C.
3101(b)).
(3) Excess balance means the average balance held in
an account at a Federal Reserve Bank by or on behalf of an eligible
institution over a reserve maintenance period that exceeds the sum of
the required reserve balance and any clearing balance.
(4) Required reserve balance means the average balance
held in an account at a Federal Reserve Bank by or on behalf of an
eligible institution over a reserve maintenance period to satisfy the
reserve requirements of this part.
(5) Targeted federal funds rate means the federal
funds rate established from time to time by the Federal Open Market
Committee.
[Codified to 12 C.F.R. § 204.10]
[Section 204.10 added at 73 Fed. Reg. 59485, October 9,
2008; amended at 73 Fed. Reg. 78617, December 23, 2008, effective
December 23, 2008, applicability date for the revised rates for
earnings on required reserve balances and excess balances is December
18, 2008.]
1 A time deposit, or a portion thereof, may be paid during the
period when an early withdrawal penalty would otherwise be required
under this part without imposing an early withdrawal penalty specified
by this part: (a) Where the time deposit is maintained in an individual
retirement account established in accordance with 26 U.S.C. 408 and is
paid within seven days after establishment of the individual retirement
account pursuant to 26 CFR 1.408-6(d)(4), where it is maintained in a
Keogh (H.R. 10) plan, or where it is maintained in a "401(k)
plan" under 26 U.S.C. 401(k); provided that the depositor forfeits
an amount at least equal to the simple interest earned on the amount
withdrawn; (b) Where the depository institution pays all or a portion of a
time deposit representing funds contributed to an individual retirement
account or a Keogh (H.R. 10) plan established pursuant to 26 U.S.C. 408
or 26 U.S.C. 401 or to a "401(k) plan" established pursuant to 26
U.S.C. 401(k) when the individual for whose benefit the account is
maintained attains age 591/2 or is disabled (as defined in 26
U.S.C. 72(m)(7)) or thereafter; (c) Where the depository institution pays that portion of a time
deposit on which federal deposit insurance has been lost as a result of
the merger of two or more federally insured banks in which the
depositor previously maintained separate time deposits, for a period of
one year from the date of the merger; (d) Upon the death of any owner of the time deposit funds; (e) When any owner of the time deposit is determined to be legally
incompetent by a court or other administrative body of competent
jurisdiction; or (f) Where a time deposit is withdrawn within ten days after a
specified maturity date even though the deposit contract provided for
automatic renewal at the maturity date. Go Back to Text
2 Other than states, provinces, municipalities, or other
regional or local governmental units or agencies or instrumentalities
thereof. Go Back to Text
3 The designated entities are specified in
12 CFR 204.125. Go Back to Text
4 In order to ensure that no more than the permitted number of
withdrawals or transfers are made, for an account to come within the
definition in § 204.2(d)(2), a depository institution must either: (a) prevent withdrawals or transfers of funds from this account
that are in excess of the limits established by § 204.2(d)(2), or (b) adopt procedures to monitor those transfers on an ex post
basis and contact customers who exceed the established limits on
more than an occasional basis. For customers who continue to violate those limits after they have
been contacted by the depository institution, the depository
institution must either close the account and place the funds in
another account that the depositor is eligible to maintain, or take
away the transfer and draft capacities of the account. An account that authorizes withdrawals or transfers in excess of
the permitted number is a transaction account regardless of whether the
authorized number of transactions are actually made. For accounts
described in § 204.2(d)(2), the institution at its option may use, on
a consistent basis, either the date on the check, draft, or similar
item, or the date the item is paid in applying the limits imposed by
that section. Go Back to Text
5 Other than states, provinces, municipalities, or other
regional or local governmental units or agencies or instrumentalities
thereof. Go Back to Text
6 The designated entities are specified in 12 CFR 217.126. Go Back to Text
7 This subparagraph does not apply to assets that were acquired
by an IBF from its establishing entity before the end of the second
reserve computation period after its establishment. Go Back to Text
8 See footnote 7. Go Back to Text
9 A deposit of a foreign branch, office, subsidiary, affiliate
or other foreign establishment ("foreign affiliate") controlled
by one or more domestic corporations is not regarded as a deposit of a
United States resident if the funds serve a purpose in connection with
its foreign or international business or that of other foreign
affiliates of the controlling domestic corporation(s). Go Back to Text
10 Other than states, provinces, municipalities, or other
regional or local governmental units or agencies or instrumentalities
thereof. Go Back to Text
11 The designated entities are specified in
12 CFR 204.125. Go Back to Text
12 See footnote 10. Go Back to Text
13 See footnote 11. Go Back to Text
[Main Tabs]
[Table of Contents - 7500]
[Index]
[Previous Page]
[Next Page]
[Search]
|