Reserves Central—Reserve Account Administration Application Frequently Asked Questions

If your question is not answered by the information provided within these frequently asked questions or the Reserves Central page, please contact your Reserves Central District Contact or the Federal Reserve's Customer Contact Center.

Deletion of Transfer Limit from Savings Deposit Definition – Announced April 24, 2020

1. What is the definition of a “savings deposit” in Regulation D?

   A “savings deposit” is 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 institution, the depositor may be permitted or authorized to make transfers and withdrawals to another account (including a transaction account) of the depositor at the same institution or to a third party, regardless of the number of such transfers and withdrawals or the manner in which such transfers and withdrawals are made.

2. Why did the Federal Reserve delete the numeric limits on certain kinds of transfers and withdrawals that can be made each month from the definition of a “savings deposit” in Regulation D?

   As a result of the elimination of reserve requirements on all transaction accounts, the retention of a regulatory distinction in Regulation D between reservable “transaction accounts” and non reservable “savings deposits” is no longer necessary. In addition, financial disruptions arising in connection with the novel coronavirus situation have caused many depositors to have a more urgent need for access to their funds by remote means, particularly in light of the closure of many depository institution branches and other in person facilities. Thus, the amendments to Regulation D are intended to allow depository institution customers more convenient access to their funds and to simplify account administration for depository institutions.

3. Are the recent amendments to Regulation D temporary or permanent?

   On April 24, 2020 (Off-site), the Board of Governors issued an interim final rule amending its Regulation D to delete the six-per-month limit on convenient transfers from “savings deposits.” The underlying reason enabling the changes in Regulation D is the Federal Open Market Committee’s (FOMC’s) choice of monetary policy framework of an ample reserve regime. In such a regime, reserve requirements are not needed. As a result, the distinction made by the transfer limit between reservable and non-reservable accounts is also not necessary. The FOMC’s choice of a monetary policy framework is not a short-term choice. The Board does not have plans to re-impose transfer limits but may make adjustments to the definition of savings accounts in response to comments received on the Board’s interim final rule and, in the future, if conditions warrant.

4. Does the interim final rule require depository institutions to suspend enforcement of the six convenient transfer limit on accounts classified as “savings deposits”?

   No. The interim final rule permits depository institutions to suspend enforcement of the six transfer limit, but it does not require depository institutions to do so.

5. May depository institutions continue to report accounts as “savings deposits” on their FR 2900 reports even after they suspend enforcement of the six transfer limit on those accounts?

   Yes. Depository institutions may continue to report these accounts as “savings deposits” on their FR 2900 reports after they suspend enforcement of the six transfer limit on those accounts.

6. If a depository institution suspends enforcement of the six transfer limit on a “savings deposit,” may the depository institution report the account as a “transaction account” rather than as a “savings deposit”?

   Yes. If a depository institution suspends enforcement of the six transfer limit on a “savings deposit,” the depository institution may report that account as a “transaction account” on its FR 2900 reports. A depository institution may instead, if it chooses, continue to report the account as a “savings deposit.”

7. If a depository institution chooses to report an account where it has suspended enforcement of the six transfer limit as a “transaction account”, what type of transaction account would the account be?

   The type of “transaction account” for FR 2900 reporting purposes depends on the underlying characteristics of the account. If the depository institution does not retain the “reservation of right” provision set forth in section 204.2(d)(1) of Regulation D on the account, the account is a demand deposit. If the depository institution does retain the “reservation of right” provision on the account, then the account is a NOW account if the depositor is eligible to hold such an account or else it continues to be a savings deposit.

8. Does the interim final rule have any impact on the “reservation of right” provisions set forth in section 204.2(d)(1) of Regulation D?

   No. The interim final rule does not have any impact on section 204.2(d)(1) of Regulation D. The “reservation of right” continues to be a part of the definition of “savings deposit” under the interim final rule.

9. If a depository institution suspends enforcement of the six transfer limit on a “savings deposit,” is the depository institution required to change the way that interest on the account is calculated or reported?

   No. The interim final rule does not require a depository institution to change the way it calculates or reports interest on an account where the depository institution has suspended enforcement of the six transfer limit.

10. Suppose a depository institution has account agreements with its “savings deposit” customers that require the depository institution to enforce the six transfer limit. Suppose further that the depository institution would like to amend those account agreements so that the depository institution no longer has a contractual obligation to enforce the six transfer limit on its “savings deposit” accounts. Does the interim final rule require the depository institution to amend those agreements in any particular way?

    No. The interim final rule does not specify the manner in which depository institutions that choose to amend their account agreements may do so.

11. If a depository institution chooses to suspend enforcement of the six transfer limit on a “savings deposit,” must the depository institution change the name of the account or product if the account or product name has the words “savings” or “savings deposit” in it?

    No. The interim final rule does not require depository institutions to change the name of any accounts or products that have the words “savings” or “savings deposit” in the name of the account or product.

12. May depository institutions suspend enforcement of the six transfer limit on a temporary basis, such as for six months?

    Yes.

13. Suppose that a depository institution currently has policies or provisions in their savings deposit account agreements pursuant to which the depository institution charges fees to savings deposit customers for transfers and withdrawals that exceed the six transfer limit. May a depository institution that suspends enforcement of the six transfer limit continue to charge these fees when savings deposit customers make seven or more convenient transfers and withdrawals in a month?

    Regulation D does not require or prohibit depository institutions from charging their customers fees for transfers and withdrawals in violation of the six transfer limit. Accordingly, the deletion of the six transfer limit does not have a direct impact on the policies or account agreements of depository institutions that charge such fees to their customers.

Elimination of Reserve Requirements – Announced March 15, 2020

1. Why did the Federal Reserve reduce reserve requirement ratios to zero percent?

   For many years, reserve requirements played a central role in the implementation of monetary policy by creating a stable demand for reserves. In January 2019, the FOMC announced its intention to implement monetary policy in an ample reserves regime. Reserve requirements do not play a significant role in this operating framework.

   As announced (Off-site) on March 15, 2020, the Board reduced reserve requirement ratios to zero percent, effective March 26, 2020, in light of the shift to an ample reserves regime. This action eliminates the need for thousands of depository institutions to maintain balances in accounts at Reserve Banks to satisfy reserve requirements, thereby freeing up liquidity in the banking system to support lending to households and businesses.

2. What reserve requirement ratios did the Board reduce to zero percent?

   The Board reduced the reserve requirement ratios on net transaction accounts to zero percent effective March 26, 2020. Reserve requirement ratios on nonpersonal time deposits and Eurocurrency liabilities have been set to zero percent since 1990.

3. When does the change in reserve requirement ratios on net transaction accounts take effect?

   The change in reserve requirement ratios on net transaction accounts takes effect with the maintenance period beginning March 26, 2020.

4. Will depository institutions’ balances in master accounts at Reserve Banks continue to receive interest after reserve requirement ratios are set to zero percent?

   Yes, balances maintained by or on behalf of depository institutions in master accounts at Reserve Banks will continue to receive interest after reserve requirement ratios are set to zero percent. All such balances will be “excess balances” and will earn interest at the interest on excess reserves (IOER) rate.

5. Is the elimination of reserve requirements permanent?

   Currently, the Board has no plans to re-impose reserve requirements. However, the Board may adjust reserve requirement ratios in the future if conditions warrant.

Reserves Administration

1. What is a reserve balance requirement?

   A reserve balance requirement is the portion of an institution’s reserve requirement that is not satisfied by its vault cash and therefore must be maintained either directly with a Reserve Bank or in a pass-through arrangement. As announced (Off-site) on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions.

2. What is a maintenance period?

   A maintenance period consists of 14 consecutive days beginning on a Thursday and ending on the second Wednesday.

   As announced (Off-site) on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. There are no changes to the maintenance period calendar associated with this announcement.

3. When can I access my institution’s reserve balance requirement?

   Information on your institution’s reserve balance requirement is available during and after the reserve balance requirement calculation period. Calendars illustrating the relationship between FR 2900 reporting (computation periods), reserve balance requirement periods, and maintenance periods are available for weekly FR 2900 reporters (PDF) and quarterly FR 2900 reporters (PDF).

   As announced (Off-site) on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions.

4. Where can I find information on the relationship between reporting periods and maintenance periods?

   Information on the relationship between reporting periods and maintenance periods are illustrated in the Reserve Maintenance Calendars for 2900 weekly (PDF) and FR 2900 quarterly (PDF) reporters.

5. What is a penalty-free band?

   A penalty-free band is a range on both sides of the reserve balance requirement within which an institution needs to maintain its average balance over the maintenance period in order to satisfy its reserve balance requirement. The top of the penalty-free band is equal to the reserve balance requirement plus a dollar amount prescribed by the Board. The bottom of the penalty-free band is equal to the reserve balance requirement minus a dollar amount prescribed by the Board. As announced (Off-site) on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions and sets the bottom and top of the penalty-free band to zero.

6. When will a depository institution have satisfied its reserve balance requirement?

   A depository institution will have satisfied its reserve balance requirement when the institution maintains an average balance over a maintenance period that is greater than or equal to the bottom of its penalty-free band. As announced (Off-site) on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions and sets the bottom of the penalty-free band to zero.

7. When will a depository institution have an excess balance?

   A depository institution has an excess balance when the institution maintains an average balance over a maintenance period that is greater than the top of its penalty-free band. As announced (Off-site) on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions. As such all balances maintained are excess balances.

8. When is interest paid on balances maintained to satisfy reserve balance requirements and on excess balances?

   Interest payments are credited to a depository institution’s account at the Federal Reserve one business day after the end of a reserve maintenance period.

9. How are interest payments on reserves calculated?

   The amount of interest payable on balances maintained at a Reserve Bank by or on behalf of an eligible institution is equal to the sum of interest on required reserves (IORR) and interest on excess reserves (IOER). IORR is calculated as the arithmetic average of the daily IORR rates in effect over a maintenance period multiplied by the average level of balances up to the top of the penalty-free band maintained over that maintenance period. From July 23, 2015 forward, for depository institutions with excess balances, IOER is calculated by multiplying the IOER rate in effect each day of the maintenance period by the institution’s total balances that day, less an adjustment to avoid the double payment of interest on balances maintained up to the top of the penalty-free band. As announced (Off-site) on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions and sets the top of the penalty-free band to zero. As such all balances maintained are excess balances that earn the IOER rate.

   For more information on the final rule amending Regulation D to permit interest payments to be based on a daily interest rate on excess reserves rather than on a maintenance period average rate, please see the corresponding notice in the Federal Register (80 FR 35565) (Off-site). For more information on how interest payments are calculated, including the relevant formulas, please see the Reserve Maintenance Manual (Off-site).

   Coming Soon: The Reserve Maintenance Manual is currently being amended to reflect all of the changes necessitated by the Board reducing reserve requirement ratios to zero percent effective March 26, 2020. The revised version of the manual will be available soon and the link above updated accordingly.

10. Why was the methodology for calculating the interest paid on reserves changed?

    Prior to July 23, 2015, IOER was calculated as the arithmetic average of the daily IOER rate in effect over a maintenance period multiplied by the institution’s average level of excess balances maintained over that maintenance period. That methodology implied that the full effect of an increase in the IOER rate on other short-term market rates may not be realized until the subsequent maintenance period in cases when an IOER rate change did not coincide with the beginning of a maintenance period. Because the current methodology calculates IOER by multiplying the IOER rate in effect each day of the maintenance period by the institution’s total balances that day, the current methodology should allow for any effect of an increase in the IOER rate on other short-term rates to be realized immediately, regardless of when during a maintenance period an IOER rate change takes place.

11. Where can I find the current level of the IORR and IOER Rates?

    From July 23, 2015 forward, the interest rates on balances maintained to satisfy reserve balance requirements and excess balances will be published on the Federal Reserve’s website on the Interest on Required Balances and Excess Balances (Off-site) page.

    As announced (Off-site) on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions. As such all balances maintained are excess balances that earn the IOER rate.

12. Where can I find past levels of the IORR and IOER Rates?

    Through July 23, 2015, the interest rates paid on balances maintained to satisfy reserve balance requirements and excess balances will be published on a maintenance period average basis on the H.3 statistical release, and the historical rates paid during this period can be found in the H.3 Data Download Program (Off-site).

    From July 23, 2015 forward, the interest rates on balances maintained to satisfy reserve balance requirements and excess balances will be published on the Federal Reserve’s website on the Interest on Required Balances and Excess Balances (Off-site) page, on a daily basis, and will be available in the Policy Rates Data Download Program (Off-site).

13. Will the Reserves Central—Reserve Account Administration application include details on interest payments, including formulas for the calculation of interest on reserves?

    Each maintenance period, the average interest rate on balances up to the top of the penalty-free band (the IORR rate) and the daily IOER rates in effect on each day of that maintenance period will be made available through the Reserves Central—Reserves Account Administration application. The Reserves Central—Reserve Account Administration application will not display the formula for calculating interest payments, but depository institutions can calculate their interest payments using the rates and balances available in the Reporting Central—Reserve Account Administration application and the interest payment formula available in the Reserve Maintenance Manual (Off-site).

    As announced (Off-site) on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions. As such all balances maintained are excess balances that earn the IOER rate.

    Coming Soon: The Reserve Maintenance Manual is currently being amended to reflect all of the changes necessitated by the Board reducing reserve requirement ratios to zero percent effective March 26, 2020. The revised version of the manual will be available soon and the link above updated accordingly.

14. When will a depository institution be deficient in its reserve balance requirement?

    A depository institution is deficient when the institution maintains an average balance over a maintenance period that is less than the bottom of the penalty-free band.

    As announced (Off-site) on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions and sets the bottom of the penalty-free band to zero. As such, no depository institutions may be deficient in its reserve balance requirement.

15. How will the amount of a deficiency be determined?

    The amount of a deficiency is the shortfall between the average end-of-day balance maintained in an institution’s master account during the reserve maintenance period and the bottom of the penalty-free band around the reserve balance requirement. As announced (Off-site) on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions and sets the bottom of the penalty-free band to zero. As such, this question is no longer applicable.

16. When will a reserve deficiency charge be assessed?

    A reserve deficiency charge is debited from a depository institution’s account at the Federal Reserve five business days after the end of a maintenance period. As announced (Off-site) on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions and sets the bottom of the penalty-free band to zero. As such, this question is no longer applicable.

Reserves Central — Reserve Account Administration Application

1. Where does the Federal Reserve provide information on a depository institution’s reserve balance requirement?

   Information on a depository institution’s reserve balance requirement is available through the Reserves Central—Reserve Account Administration application.

   As announced (Off-site) on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions.

2. How do I set up access to the Reserves Central—Reserve Account Administration application?

   To help guide your organization through the process, visit the Reserves Central—Reserve Account Administration Application Setup page.

3. Where can I find information on how to use the Reserves Central—Reserve Account Administration application?

   Review the Reserves Central—Reserve Account Administration Step-by-Step Guide (PDF) or the Accessible Version for detailed instructions on how to use the application. Visit the Reserves Central page for additional information.

4. Does my organization have to use the Reserves Central—Reserve Account Administration application?

   No. Your organization does not have to use the Reserves Central—Reserve Account Administration application. Your organization is responsible for satisfying its reserve requirement whether or not your organization uses the application. Reserve requirement and position information are available through the Reserves Central—Reserve Account Administration application.

   As announced (Off-site) on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions.

5. How do I print information within the Reserves Central—Reserve Account Administration application?

   The "View PDF" button contained within the following screens: Reserve Requirements, Reservable Liabilities, Balance Detail, and Interest and Charge Detail, allows you to save and/or print a PDF file of the desired information. Please review the Reserves Central—Reserve Account Administration Step-by-Step Guide (PDF) or the Accessible Version for further information.

6. Whom do I contact for additional information?

   If you need additional information, please contact your Reserves Central District Contact.

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