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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.
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.
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.
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.
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.
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.
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.”
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.
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.
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.
No. The interim final rule does not specify the manner in which depository institutions that choose to amend their account agreements may do so.
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.
Yes.
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.
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.
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.
The change in reserve requirement ratios on net transaction accounts takes effect with the maintenance period beginning March 26, 2020.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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).
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.
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.
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.
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.
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.
To help guide your organization through the process, visit the Reserves Central—Reserve Account Administration Application Setup page.
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.
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.
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.
If you need additional information, please contact your Reserves Central District Contact.