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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.

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.

  6. Are there changes to deposit reporting (FR 2900) associated with the elimination of reserve requirements?

    No, there are no changes to deposit reporting (FR 2900) associated with the elimination of reserve requirements. Depository institutions should continue to report deposits on the FR 2900 at the same frequency and in the same way as they have been reporting.

  7. Are there changes to the six convenient transfer limit on savings deposits associated with the elimination of reserve requirements?

    No, but the distinction between savings deposits and transaction accounts no longer has significance for reserve requirements purposes. The six convenient transfer limit in Regulation D distinguishes savings deposits from transaction accounts. This distinction was essential during the time when transaction accounts were subject to reserve requirements but savings deposits were not. As announced (Off-site) on March 15, 2020, Board reduced reserve requirement ratios on transaction accounts to zero percent, effective March 26, 2020. Accordingly, there is no longer any significance for reserve requirements purposes to the distinction between savings deposits and transaction accounts: neither one is subject to reserve requirements. However, the six convenient transfer limit still applies to any account that a depository institution classifies as a “savings deposit” for purposes of the depository institution’s FR 2900 deposit reports.

  8. Are depository institutions required under Regulation D to offer accounts that are characterized as “savings deposits” for deposit reporting purposes?

    No, there is no regulatory requirement that a depository institution offer, or continue to offer, accounts that meet the regulatory definition of “savings deposits.” Depository institutions are free to continue to offer accounts that meet the regulatory definition of “savings deposit” accounts, that is, accounts subject to the six convenient transfer limit. Depository institutions are not required to offer such accounts, however. If depository institutions choose to continue to offer accounts that meet the regulatory definition of “savings deposits,” then depository institutions must enforce the six convenient transfer limit in Regulation D applicable to “savings deposits.” Depository institutions are free to allow an unlimited number of convenient transfers from an account, even an account that has been previously classified for deposit reporting purposes as a “savings deposit,” provided that the institution reports the account as a “transaction account.”

    The Federal Reserve understands that the process of correctly classifying accounts that offer more than six convenient transfers as transaction accounts on the FR 2900 report may take time, and each Reserve Bank will work with reporting banks to support their efforts to accurately report on the FR 2900 on a time line that makes sense relative to the current situation.

  9. Are depository institutions permitted to reclassify accounts as “transaction accounts” that are currently classified as “savings deposits” for deposit reporting purposes?

    Yes, provided that they are not prohibited under their existing account agreements with their savings deposit customers from doing so. Depository institutions should review their account agreements with their savings deposit customers to ensure that reclassifying such accounts as “transaction accounts” would not be prohibited by those agreements. Depository institutions may wish to amend any savings deposit account agreements that contain terms prohibiting reclassifying such accounts as “transaction accounts.”

    The Federal Reserve understands that the process of correctly classifying accounts that offer more than six convenient transfers as transaction accounts on the FR 2900 report may take time, and each Reserve Bank will work with reporting banks to support their efforts to accurately report on the FR 2900 on a timeline that makes sense relative to the current situation.

  10. Are depository institutions required to reclassify accounts as “transaction accounts” that are currently classified as “savings deposits” for deposit reporting purposes?

    No.

  11. Are depository institutions that reclassify their savings deposits as transaction accounts required to notify those customers that their savings deposits are being reclassified as transaction accounts?

    Depository institutions should review their account agreements with their savings deposit customers to determine whether there is a contractual obligation for the depository institution to notify customers of changes in terms. The reclassification of an account from a savings deposit account to a transaction account would mean that the depository institution would no longer have to enforce the six convenient transfer limit on such an account. Notifying the customer that the six convenient transfer limit no longer applied to such an account would be prudent, especially under circumstances like those currently prevailing where many customers require greater access to their funds and the physical offices of their financial institutions may be closed.

  12. Are depository institutions required to pay different rates of interest on accounts classified as “savings deposits” than they pay on accounts classified as “transaction accounts”?

    No.

  13. Are there any special rules about transfers from savings deposits that apply in light of the coronavirus situation?

    Customers may be experiencing greater needs to have convenient access to their savings deposits in light of the coronavirus outbreak, which may cause many financial institutions to close their branches and other physical locations. As a result, the Federal Reserve encourages banks to work with customers. One way to do so would be for the bank to allow customers to have more than six convenient transfers on their accounts, and for the bank to report such accounts as transaction accounts on the FR 2900. As noted above, banks will need to ensure that their account agreements with their customers are consistent with reclassifying such accounts as “transaction accounts.” See FAQ No. [9, “Are depository institutions permitted to reclassify accounts as “transaction accounts” that are currently classified as “savings deposits” for deposit reporting purposes?”].

  14. Can banks immediately allow customers to make more than six convenient transfers per month from their savings deposits and then report those accounts as “transaction accounts” later on the FR 2900?

    Yes. As stated above, banks should work with their local Reserve Banks to support their efforts to accurately report on the FR 2900 on a timeline that makes sense relative to the current situation.

  15. Are banks required to charge their customers fees for violating the six transfer limit?

    No. Regulation D does not require or prohibit the charging of fees by banks to customers that exceed the transfer limits.

  16. Do banks that charge their customers fees for violating the transfer limits have to pay those fees to the Federal Reserve?

    These fees are bank fees, and are not government fees or taxes. Banks that charge such fees do not send them to the Federal Reserve.

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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