[Federal Register Volume 88, Number 228 (Wednesday, November 29, 2023)]
[Rules and Regulations]
[Pages 83316-83317]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-26212]
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FEDERAL RESERVE SYSTEM
12 CFR Part 204
[Regulation D; Docket No. R-1823]
RIN 7100-AG71
Reserve Requirements of Depository Institutions
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Final rule.
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SUMMARY: The Board is amending Regulation D, Reserve Requirements of
Depository Institutions, to reflect the annual indexing of the reserve
requirement exemption amount and the low reserve tranche for 2024. The
annual indexation of these amounts is required notwithstanding the
Board's action in March 2020 of setting all reserve requirement ratios
to zero. The reserve requirement exemption amount for 2023 will remain
$36.1 million, unchanged for 2024, consistent with the Federal Reserve
Act (the ``Act''). The Board is amending Regulation D to set the amount
of the low reserve tranche at $644.0 million (decreased from $691.7
million in 2023). The adjustment to the low reserve tranche is derived
using a statutory formula specified in the Act. The annual indexation
of the reserve requirement exemption amount and low reserve tranche is
required by statute but will not affect depository institutions'
reserve requirements, which will remain zero.
DATES:
Effective date: December 29, 2023.
Compliance date: The new low reserve tranche will apply beginning
January 1, 2024.
FOR FURTHER INFORMATION CONTACT: Benjamin Snodgrass, Senior Counsel
(202/263-4877), Legal Division; Kristen Payne, Lead Financial
Institution and Policy Analyst (202/452-2872), Division of Monetary
Affairs; for users of TTY/TRS, please call 711 from any telephone,
anywhere in the United States, or (202) 263-4869; Board of Governors of
the Federal Reserve System, 20th and C Streets NW, Washington, DC
20551.
SUPPLEMENTARY INFORMATION: Section 19(b)(2) of the Act (12 U.S.C.
461(b)(2)) requires each depository institution to maintain reserves
against its transaction accounts and nonpersonal time deposits, as
prescribed by Board regulations, for the purpose of implementing
monetary policy. The Board's actions with respect to this provision are
discussed below.
I. Reserve Requirements
Section 19(b) of the Act authorizes different ranges of reserve
requirement ratios depending on the amount of transaction account
balances at a depository institution. Section 19(b)(11)(A) of the Act
(12 U.S.C. 461(b)(11)(A)) provides that a zero percent reserve
requirement ratio shall apply at each depository institution to total
reservable liabilities that do not exceed a certain amount, known as
the reserve requirement exemption amount. Section 19(b)(11)(B) provides
that, before December 31 of each year, the Board shall issue a
regulation adjusting the reserve requirement exemption amount for the
next calendar year if total reservable liabilities held at all
depository institutions increase from one year to the next. The Act
requires the percentage increase in the reserve requirement exemption
amount to be 80 percent of the percentage increase in total reservable
liabilities of all depository institutions over the one-year period
that ends on the June 30 prior to the adjustment. No adjustment is made
to the reserve requirement exemption amount if total reservable
liabilities held at all depository institutions should decrease during
the applicable time period.
Total reservable liabilities of all depository institutions
decreased by 8.6 percent, from $20,841 billion to $19,057 billion,
between June 30, 2022, and June 30, 2023.\1\ Accordingly, the reserve
requirement exemption amount for 2024 will remain at $36.1 million,
unchanged from its level in 2023.\2\
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\1\ The June 30th value for 2022 may differ from the value used
in the previous year's calculation because depository institutions
may revise their deposit data to correct for inaccuracies.
\2\ Consistent with Board practice, the low reserve tranche and
reserve requirement exemption amounts have been rounded to the
nearest $0.1 million.
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Pursuant to Section 19(b)(2) of the Act (12 U.S.C. 461(b)(2)),
transaction account balances maintained at each depository institution
over the reserve requirement exemption amount and up to a certain
amount, known as the low reserve tranche, may be subject to a reserve
requirement ratio of not more than 3 percent (and which may be zero).
Transaction account balances over the low reserve tranche may be
subject to a reserve requirement ratio of not more than 14 percent (and
which may be zero). Section 19(b)(2) also provides that, before
December 31 of each year, the Board shall issue a regulation adjusting
the low reserve tranche for the next calendar year. The Act requires
the adjustment in the low reserve tranche to be 80 percent of the
percentage increase or decrease in total transaction accounts of all
depository institutions over the one-year period that ends on the June
30 prior to the adjustment.
Net transaction accounts of all depository institutions decreased
8.6 percent, from $17,549 billion to $16,037 billion, between June 30,
2022, and June 30, 2023.\3\ Accordingly, the Board is amending
Regulation D to set the low reserve tranche for net transaction
accounts for 2024 at $644.0 million, a decrease of $47.7 million from
2023. The new low reserve tranche will be effective for all depository
institutions beginning January 1, 2024.
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\3\ The June 30th value for 2022 may differ from the value used
in the previous year's calculation because depository institutions
may revise their deposit data to correct for inaccuracies.
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Effective March 26, 2020, the Board reduced reserve requirement
ratios on all net transaction accounts to zero percent, eliminating
reserve requirements for all depository institutions. The annual
indexation of the reserve requirement exemption amount and the low
reserve tranche for 2024 is required by statute but will not affect
depository institutions' reserve requirements, which will remain zero.
II. Regulatory Analysis
Administrative Procedure Act
The provisions of 5 U.S.C. 553(b) relating to notice of proposed
rulemaking have not been followed in connection with the adoption of
these amendments. The amendments involve expected, ministerial
adjustments prescribed by statute and by the Board's policy concerning
reporting practices. The adjustments in the reserve requirement
exemption amount and the low reserve tranche serve to reduce regulatory
burdens on depository institutions. Accordingly, the Board finds good
cause for determining, and so
[[Page 83317]]
determines, that notice in accordance with 5 U.S.C. 553(b) is
unnecessary.
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) does not apply to a rulemaking
where a general notice of proposed rulemaking is not required.\4\ As
noted previously, the Board has determined that it is unnecessary to
publish a general notice of proposed rulemaking for this final rule.
Accordingly, the RFA's requirements relating to an initial and final
regulatory flexibility analysis do not apply.
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\4\ 5 U.S.C. 603 and 604.
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Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995,\5\ the
Board reviewed this final rule. No collections of information pursuant
to the Paperwork Reduction Act are contained in the final rule.
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\5\ 44 U.S.C. 3506; 5 CFR part 1320.
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List of Subjects in 12 CFR Part 204
Banks, Banking, Reporting and recordkeeping requirements.
Authority and Issuance
For the reasons set forth in the preamble, the Board is amending 12
CFR part 204 as follows:
PART 204--RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS
(REGULATION D)
0
1. The authority citation for part 204 continues to read as follows:
Authority: 12 U.S.C. 248(a), 248(c), 461, 601, 611, and 3105.
0
2. Section 204.4 is amended by revising paragraph (f) to read as
follows:
Sec. 204.4 Computation of required reserves.
* * * * *
(f) For all depository institutions, Edge and Agreement
corporations, and United States branches and agencies of foreign banks,
required reserves are computed by applying the reserve requirement
ratios in table 1 to this paragraph (f) to net transaction accounts,
nonpersonal time deposits, and Eurocurrency liabilities of the
institution during the computation period.
Table 1 to Paragraph (f)
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Reservable liability Reserve requirement
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Net Transaction Accounts:
$0 to reserve requirement exemption
amount ($36.1 million).
Over reserve requirement exemption 0 percent of amount.
amount ($36.1 million) and up to low
reserve tranche ($644.0 million).
Over low reserve tranche ($644.0 $0 plus 0 percent of
million). amount over $644.0
million.
Nonpersonal time deposits............... 0 percent.
Eurocurrency liabilities................ 0 percent.
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By order of the Board of Governors of the Federal Reserve
System, acting through the Director of the Division of Monetary
Affairs under delegated authority.
Ann E. Misback,
Secretary of the Board.
[FR Doc. 2023-26212 Filed 11-28-23; 8:45 am]
BILLING CODE 6210-01-P