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Board of Governors of the Federal Reserve System
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Federal Reserve Board of Governors

Term Deposit Facility

Term deposits will facilitate the implementation of monetary policy by providing a new tool by which the Federal Reserve can manage the aggregate quantity of reserve balances held by depository institutions. Funds placed in term deposits are removed from the accounts of participating institutions for the life of the term deposit and thereby drain reserve balances from the banking system. Reserve Banks will offer term deposits through the Term Deposit Facility (TDF), and all institutions that are eligible to receive earnings on their balances at Reserve Banks may participate in the term deposit program. In the Policy Normalization Principles and Plans adopted by the Federal Open Market Committee (FOMC) on September 17, 2014, the FOMC indicated that during the process of monetary policy normalization, the Federal Reserve intends to use other supplementary tools, such as the TDF, as needed to help control the federal funds rate and move it into the target range set by the FOMC.

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Last update: September 17, 2014