October 18, 2006
Annual adjustments for reserve calculations and deposit reporting, Regulation D
For immediate release
The Federal Reserve Board on Wednesday announced the annual indexing of the low reserve tranche and of the reserve requirement exemption amount for 2007. These amounts are used in the calculation of reserve requirements of depository institutions. The Board also announced the annual indexing of the nonexempt deposit cutoff level and the reduced reporting limit that will be used to determine deposit reporting panels effective 2007.
All depository institutions must hold a percentage of certain types of deposits as reserves in the form of vault cash, as a deposit in a Federal Reserve Bank, or as a deposit in a pass-through account at a correspondent institution. Reserve requirements currently are assessed on the depository institution's net transaction accounts (mostly checking accounts). Depository institutions must also regularly submit deposit reports of their deposits and other reservable liabilities.
For net transaction accounts in 2007, the first $8.5 million, up from $7.8 million in 2006, will be exempt from reserve requirements. A 3 percent reserve ratio will be assessed on net transaction accounts over $8.5 million up to and including $45.8 million, down from $48.3 million in 2006. A 10 percent reserve ratio will be assessed on net transaction accounts in excess of $45.8 million.
These annual adjustments, known as the low reserve tranche adjustment and the reserve requirement exemption amount adjustment, are based on growth in net transaction accounts and total reservable liabilities, respectively, at all depository institutions between June 30, 2005 and June 30, 2006.
For depository institutions that report weekly, the low reserve tranche adjustment and the reserve requirement exemption amount adjustment will apply to the fourteen-day reserve computation period that begins Tuesday, November 21, 2006 and the corresponding fourteen-day reserve maintenance period that begins Thursday, December 21, 2006.
For depository institutions that report quarterly, the low reserve tranche adjustment and the reserve requirement exemption amount adjustment will apply to the seven-day reserve computation period that begins Tuesday, December 19, 2006, and the corresponding seven-day reserve maintenance period that begins Thursday, January 18, 2007.
The Board also announced changes in two other amounts, the nonexempt deposit cutoff level and the reduced reporting limit, that are used to determine the frequency with which depository institutions must submit deposit reports. The attached Federal Register notice contains a description of the new boundaries for deposit reporting that will be effective 2007.
The Board's notice is attached.