(a) The Board is authorized for
the purposes of this section to define the terms used in this section,
to determine what shall be deemed a payment of interest, to determine
what types of obligations, whether issued directly by a member bank
or indirectly by an affiliate of a member bank or by other means,
shall be deemed a deposit, and to prescribe such regulations as it
may deem necessary to effectuate the purposes of this section and
to prevent evasions thereof.
(1) Definitions. The following definitions and rules apply to this subsection, subsection
(c), section 11A, the first paragraph of section 13, and the second,
thirteenth, and fourteenth paragraphs of section 16:
(A) The
term “depository institution” means—
(i) any insured bank as defined
in section 3 of the Federal Deposit Insurance Act or any bank which
is eligible to make application to become an insured bank under section
5 of such Act;
(ii) any
mutual savings bank as defined in section 3 of the Federal Deposit
Insurance Act or any bank which is eligible to make application to
become an insured bank under section 5 of such Act;
(iii) any savings bank as defined in section
3 of the Federal Deposit Insurance Act or any bank which is eligible
to make application to become an insured bank under section 5 of such
Act;
(iv) any insured
credit union as defined in section 101 of the Federal Credit Union
Act or any credit union which is eligible to make application to become
an insured credit union pursuant to section 201 of such Act;
(v) any member as defined in
section 2 of the Federal Home Loan Bank Act;
(vi) any savings association (as defined in
section 3 of the Federal Deposit Insurance Act) which is an insured
depository institution (as defined in such Act) or is eligible to
apply to become an insured depository institution under the Federal
Deposit Insurance Act; and
(vii) for the purpose of section 13 and the fourteenth paragraph
of section 16, any association or entity which is wholly owned by
or which consists only of institutions referred to in clauses (i)
through (vi).
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(B) The term “bank” means any insured
or noninsured bank, as defined in section 3 of the Federal Deposit
Insurance Act, other than a mutual savings bank or a savings bank
as defined in such section.
(C) The term “transaction account” means
a deposit or account on which the depositor or account holder is permitted
to make withdrawals by negotiable or transferable instrument, payment
orders of withdrawal, telephone transfers, or other similar items
for the purpose of making payments or transfers to third persons or
others. Such term includes demand deposits, negotiable order of withdrawal
accounts, savings deposits subject to automatic transfers, and share
draft accounts.
(D) The term “nonpersonal time deposits” means a transferable time
deposit or account or a time deposit or account representing funds
deposited to the credit of, or in which any beneficial interest is
held by, a depositor who is not a natural person.
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(E) The term “reservable liabilities”
means transaction accounts, nonpersonal time deposits, and all net
balances, loans, assets, and obligations which are, or may be, subject
to reserve requirements under paragraph (5).
(F) In order to prevent evasions of
the reserve requirements imposed by this subsection, after consultation
with the Board of Directors of the Federal Deposit Insurance Corporation,
the Director of the Office of Thrift Supervision, and the National
Credit Union Administration Board, the Board of Governors of the Federal
Reserve System is authorized to determine, by regulation or order,
that an account or deposit is a transaction account if such account
or deposit may be used to provide funds directly or indirectly for
the purpose of making payments or transfers to third persons or others.
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(2) Reserve requirements.
(A) Each
depository institution shall maintain reserves against its transaction
accounts as the Board may prescribe by regulation solely for the purpose
of implementing monetary policy—
(i) in a ratio of not greater
than 3 percent (and which may be zero) for that portion of its total
transaction accounts of $25,000,000 or less, subject to subparagraph
(C); and
(ii) in the ratio
of 12 per centum, or in such other ratio as the Board may prescribe
not greater than 14 per centum (and which may be zero) for that portion
of its total transaction accounts in excess of $25,000,000, subject
to subparagraph (C).
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(B) Each depository institution shall
maintain reserves against its nonpersonal time deposits in the ratio
of 3 per centum, or in such other ratio not greater than 9 per centum
and not less than zero per centum as the Board may prescribe by regulation
solely for the purpose of implementing monetary policy.
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(C) Beginning in 1981, not later than
December 31 of each year the Board shall issue a regulation increasing
for the next succeeding calendar year the dollar amount which is contained
in subparagraph (A) or which was last determined pursuant to this
subparagraph for the purpose of such subparagraph, by an amount obtained
by multiplying such dollar amount by 80 per centum of the percentage
increase in the total transaction accounts of all depository institutions.
The increase in such transaction accounts shall be determined by subtracting
the amount of such accounts on June 30 of the preceding calendar year
from the amount of such accounts on June 30 of the calendar year involved.
In the case of any such 12-month period in which there has been a
decrease in the total transaction accounts of all depository institutions,
the Board shall issue such a regulation decreasing for the next succeeding
calendar year such dollar amount by an amount obtained by multiplying
such dollar amount by 80 per centum of the percentage decrease in
the total transaction accounts of all depository institutions. The
decrease in such transaction accounts shall be determined by subtracting
the amount of such accounts on June 30 of the calendar year involved
from the amount of such accounts on June 30 of the previous calendar
year.
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(D) Any reserve requirement
imposed under this subsection shall be uniformly applied to all transaction
accounts at all depository institutions. Reserve requirements imposed
under this subsection shall be uniformly applied to nonpersonal time
deposits at all depository institutions, except that such requirements
may vary by the maturity of such deposits.
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(3) Waiver of
ratio limits in extraordinary circumstances. Upon a finding by
at least 5 members of the Board that extraordinary circumstances require
such action, the Board, after consultation with the appropriate committees
of the Congress, may impose, with respect to any liability of depository
institutions, reserve requirements outside the limitations as to ratios
and as to types of liabilities otherwise prescribed by paragraph (2)
for a period not exceeding 180 days, and for further periods not exceeding
180 days each by affirmative action by at least 5 members of the Board
in each instance. The Board shall promptly transmit to the Congress
a report of any exercise of its authority under this paragraph and
the reasons for such exercise of authority.
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(4) Supplemental
reserves.
(A) The Board may, upon the affirmative
vote of not less than 5 members, impose a supplemental reserve requirement
on every depository institution of not more than 4 per centum of its
total transaction accounts. Such supplemental reserve requirement
may be imposed only if—
(i) the sole purpose of such requirement is
to increase the amount of reserves maintained to a level essential
for the conduct of monetary policy;
(ii) such requirement is not imposed for the
purpose of reducing the cost burdens resulting from the imposition
of the reserve requirements pursuant to paragraph (2);
(iii) such requirement is not
imposed for the purpose of increasing the amount of balances needed
for clearing purposes; and
(iv) on the date on which the supplemental reserve requirement is
imposed, except as provided in paragraph (11), the total amount of
reserves required pursuant to paragraph (2) is not less than the amount
of reserves that would be required if the initial ratios specified
in paragraph (2) were in effect.
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(B) The Board may require the supplemental
reserve authorized under subparagraph (A) only after consultation
with the Board of Directors of the Federal Deposit Insurance Corporation,
the Director of the Office of Thrift Supervision, and the National
Credit Union Administration Board. The Board shall promptly transmit
to the Congress a report with respect to any exercise of its authority
to require supplemental reserves under subparagraph (A) and such report
shall state the basis for the determination to exercise such authority.
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(C) If a supplemental reserve
under subparagraph (A) has been required of depository institutions
for a period of one year or more, the Board shall review and determine
the need for continued maintenance of supplemental reserves and shall
transmit annual reports to the Congress regarding the need, if any,
for continuing the supplemental reserve.
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(D) Any supplemental reserve imposed
under subparagraph (A) shall terminate at the close of the first 90-day
period after such requirement is imposed during which the average amount
of reserves required under paragraph (2) are less than the amount
of reserves which would be required during such period if the initial
ratios specified in paragraph (2) were in effect.
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(5) Reserves related to foreign obligations or assets. Foreign branches,
subsidiaries, and international banking facilities of nonmember depository
institutions shall maintain reserves to the same extent required by
the Board of foreign branches, subsidiaries, and international banking
facilities of member banks. In addition to any reserves otherwise
required to be maintained pursuant to this subsection, any depository
institution shall maintain reserves in such ratios as the Board may
prescribe against—
(A) net balances owed by domestic offices
of such depository institution in the United States to its directly
related foreign offices and to foreign offices of nonrelated depository
institutions;
(B)
loans to United States residents made by overseas offices of such
depository institution if such depository institution has one or more
offices in the United States; and
(C) assets (including participations)
held by foreign offices of a depository institution in the United
States which were acquired from its domestic offices.
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(6) Exemption for certain deposits. The requirements imposed under
paragraph (2) shall not apply to deposits payable only outside the
States of the United States and the District of Columbia, except that
nothing in this subsection limits the authority of the Board to impose
conditions and requirements on member banks under section 25 of this
Act or the authority of the Board under section 7 of the International
Banking Act of 1978 (12 U.S.C. 3105).
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(7) Discount
and borrowing. Any depository institution in which transaction
accounts or nonpersonal time deposits are held shall be entitled to
the same discount and borrowing privileges as member banks. In the
administration of discount and borrowing privileges, the Board and
the Federal Reserve banks shall take into consideration the special
needs of savings and other depository institutions for access to discount
and borrowing facilities consistent with their long-term asset portfolios
and the sensitivity of such institutions to trends in the national
money markets.
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(8) Transitional adjustments.
(A) Any
depository institution required to maintain reserves under this subsection
which was engaged in business on July 1, 1979, but was not a member
of the Federal Reserve System on or after that date, shall maintain
reserves against its deposits during the first twelve-month period
following the effective date of this paragraph in amounts equal to
one-eighth of those otherwise required by this subsection, during
the second such twelve-month period in amounts equal to one-fourth
of those otherwise required, during the third such twelve-month period
in amounts equal to three-eighths of those otherwise required, during
the fourth twelve-month period in amounts equal to one-half of those
otherwise required, and during the fifth twelve-month period in amounts
equal to five-eighths of those otherwise required, during the sixth
twelve-month period in amounts equal to three-fourths of those otherwise
required, and during the seventh twelve-month period in amounts equal
to seven-eighths of those otherwise required. This subparagraph does not apply
to any category of deposits or accounts which are first authorized
pursuant to Federal law in any State after April 1, 1980.
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(B) With respect to any bank which was
a member of the Federal Reserve System during the entire period beginning
on July 1, 1979, and ending on the effective date of the Monetary
Control Act of 1980, the amount of required reserves imposed pursuant
to this subsection on and after the effective date of such Act that
exceeds the amount of reserves which would have been required of such
bank if the reserve ratios in effect during the reserve computation
period immediately preceding such effective date were applied may,
at the discretion of the Board and in accordance with such rules and
regulations as it may adopt, be reduced by 75 per centum during the
first year which begins after such effective date, 50 per centum during
the second year, and 25 per centum during the third year.
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(C) (i) With
respect to any bank which is a member of the Federal Reserve System
on the effective date of the Monetary Control Act of 1980, the amount
of reserves which would have been required of such bank if the reserve
ratios in effect during the reserve computation period immediately
preceding such effective date were applied that exceeds the amount
of required reserves imposed pursuant to this subsection shall, in
accordance with such rules and regulations as the Board may adopt,
be reduced by 25 per centum during the first year which begins after
such effective date, 50 per centum during the second year, and 75
per centum during the third year.
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(ii) If a bank becomes a member bank during
the four-year period beginning on the effective date of the Monetary
Control Act of 1980, and if the amount of reserves which would have
been required of such bank, determined as if the reserve ratios in
effect during the reserve computation period immediately preceding
such effective date were applied, and as if such bank had been a member
during such period, exceeds the amount of reserves required pursuant
to this subsection, the amount of reserves required to be maintained
by such bank beginning on the date on which such bank becomes a member
of the Federal Reserve System shall be the amount of reserves which
would have been required of such bank if it had been a member on the
day before such effective date, except that the amount of such excess
shall, in accordance with such rules and regulations as the Board
may adopt, be reduced by 25 per centum during the first year which
begins after such effective date, 50 per centum during the second
year, and 75 per centum during the third year.
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(D) (i) Any
bank which was a member bank on July 1, 1979, and which withdraws
from membership in the Federal Reserve System during the period beginning
on July 1, 1979, and ending on March 31, 1980, shall maintain reserves
during the first twelve-month period beginning on the date of enactment
of this clause in amounts equal to one-half of those otherwise required
by this subsection, during the second such twelve-month period in
amounts equal to two-thirds of those otherwise required, and during
the third such twelve-month period in amounts equal to five-sixths
of those otherwise required.
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(ii) Any bank which withdraws from membership
in the Federal Reserve System on or after the date of enactment of the
Depository Institutions Deregulation and Monetary Control Act of 1980
shall maintain reserves in the same amount as member banks are required
to maintain under this subsection, pursuant to subparagraphs (B) and
(C)(i).
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(E)
This subparagraph applies to any depository institution that, on August
1, 1978, (i) was engaged in business as a depository institution in
a State outside the continental limits of the United States, and (ii)
was not a member of the Federal Reserve System at any time on or after
such date. Such a depository institution shall not be required to
maintain reserves against its deposits held or maintained at its offices
located in a State outside the continental limits of the United States
until the first day of the sixth calendar year which begins after
the effective date of the Monetary Control Act of 1980. Such a depository
institution shall maintain reserves against its deposits during the
sixth calendar year which begins after such effective date in an amount
equal to one-eighth of that otherwise required by paragraph (2), during
the seventh such year in an amount equal to one-fourth of that otherwise
required, during the eighth such year in an amount equal to three-eighths
of that otherwise required, during the ninth such year in an amount
equal to one-half of that otherwise required, during the tenth such
year in an amount equal to five-eighths of that otherwise required,
during the eleventh such year in an amount equal to three-fourths
of that otherwise required, and during the twelfth such year in an
amount equal to seven-eighths of that otherwise required.
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(9) Exemption. This subsection shall not apply with respect to any
financial institution which—
(A) is organized solely to do business
with other financial institutions;
(B) is owned primarily by the financial
institutions with which it does business; and
(C) does not do business with the general
public.
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(10) Waivers. In individual cases, where a Federal
supervisory authority waives a liquidity requirement, or waives the
penalty for failing to satisfy a liquidity requirement, the Board
shall waive the reserve requirement, or waive the penalty for failing
to satisfy a reserve requirement, imposed pursuant to this subsection
for the depository institution involved when requested by the Federal
supervisory authority involved.
2-234.1
(11) Additional
exemptions.
(A) (i) Notwithstanding
the reserve requirement ratios established under paragraphs (2) and
(5) of this subsection, a reserve ratio of zero per centum shall apply
to any combination of reservable liabilities, which do not exceed
$2,000,000 (as adjusted under subparagraph (B)), of each depository
institution.
(ii) Each
depository institution may designate, in accordance with such rules
and regulations as the Board shall prescribe, the types and amounts
of reservable liabilities to which the reserve ratio of zero per centum
shall apply, except that transaction accounts which are designated
to be subject to a reserve ratio of zero per centum shall be accounts
which would otherwise be subject to a reserve ratio of 3 per centum
under paragraph (2).
(iii)
The Board shall minimize the reporting necessary to determine whether
depository institutions have total reservable liabilities of less
than $2,000,000 (as adjusted under subparagraph (B)). Consistent with
the Board’s responsibility to monitor and control monetary and credit
aggregates, depository institutions which have reserve requirements under
this subsection equal to zero per centum shall be subject to less
overall reporting requirements than depository institutions which
have a reserve requirement under this subsection that exceeds zero
per centum.
(B) (i) Beginning in 1982, not later than
December 31 of each year, the Board shall issue a regulation increasing
for the next succeeding calendar year the dollar amount specified
in subparagraph (A), as previously adjusted under this subparagraph,
by an amount obtained by multiplying such dollar amount by 80 per
centum of the percentage increase in the total reservable liabilities
of all depository institutions.
(ii) The increase in total reservable liabilities
shall be determined by subtracting the amount of total reservable
liabilities on June 30 of the preceding calendar year from the amount
of total reservable liabilities on June 30 of the calendar year involved.
In the case of any such twelve-month period in which there has been
a decrease in the total reservable liabilities of all depository institutions,
no adjustment shall be made. A decrease in total reservable liabilities
shall be determined by subtracting the amount of total reservable
liabilities on June 30 of the calendar year involved from the amount
of total reservable liabilities on June 30 of the previous calendar
year.
2-234.2
(12) Earnings
on balances.
(A) Balances maintained at a Federal
Reserve bank by or on behalf of a depository institution may receive
earnings to be paid by the Federal Reserve bank at least once each
calendar quarter, at a rate or rates not to exceed the general level
of short-term interest rates.
(B) The Board may prescribe regulations
concerning—
(i) the payment of earnings in accordance
with this paragraph;
(ii)
the distribution of such earnings to the depository institutions which
maintain balances at such banks, or on whose behalf such balances
are maintained; and
(iii)
the responsibilities of depository institutions, Federal Home Loan
Banks, and the National Credit Union Administration Central Liquidity
Facility with respect to the crediting and distribution of earnings
attributable to balances maintained, in accordance with subsection
(c)(l)(A), in a Federal Reserve bank by any such entity on behalf
of depository institutions.
(C) For purposes of this paragraph,
the term “depository institution”, in addition to the institutions
described in paragraph (l)(A), includes any trust company, corporation
organized under section 25A or having an agreement with the Board
under section 25, or any branch or agency of a foreign bank (as defined
in section l(b) of the International Banking Act of 1978).
(c) (1) Reserves held by a depository
institution to meet the requirements imposed pursuant to subsection
(b) shall, subject to such rules and regulations as the Board shall
prescribe, be in the form of—
(A) balances maintained
for such purposes by such depository institution in the Federal Reserve
bank of which it is a member or at which it maintains an account,
except that (i) the Board may, by regulation or order, permit depository
institutions to maintain all or a portion of their required reserves
in the form of vault cash, except that any portion so permitted shall
be identical for all depository institutions, and (ii) vault cash
may be used to satisfy any supplemental reserve requirement imposed
pursuant to subsection (b)(4), except that all such vault cash shall
be excluded from any computation of earnings pursuant to subsection
(b); and
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(B) balances maintained
by a depository institution in a depository institution which maintains
required reserve balances at a Federal Reserve bank, in a Federal
Home Loan Bank, or in the National Credit Union Administration Central
Liquidity Facility, if such depository institution, Federal Home Loan
Bank, or National Credit Union Administration Central Liquidity Facility
maintains such funds in the form of balances in a Federal Reserve
bank of which it is a member or at which it maintains an account.
Balances received by a depository institution from a second depository
institution and used to satisfy the reserve requirement imposed on
such second depository institution by this section shall not be subject
to the reserve requirements of this section imposed on such first
depository institution, and shall not be subject to assessments or
reserves imposed on such first depository institution pursuant to
section 7 of the Federal Deposit Insurance Act (12 U.S.C. 1817), section
404 of the National Housing Act (12 U.S.C. 1727), or section 202 of
the Federal Credit Union Act (12 U.S.C. 1782).
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(2) The balances maintained to meet the
reserve requirements of subsection (b) by a depository institution
in a Federal Reserve bank or passed through a Federal Home Loan Bank
or the National Credit Union Administration Central Liquidity Facility
or another depository institution to a Federal Reserve bank may be
used to satisfy liquidity requirements which may be imposed under
other provisions of Federal or State law.
[12 USC 461(a)-(c).
As amended by acts of June 21, 1917 (40 Stat. 239); Aug. 23, 1935
(49 Stat. 714); Sept. 21, 1966 (80 Stat. 823); Dec. 23, 1969 (83 Stat.
374, 375); Oct. 29, 1974 (88 Stat. 1557); March 31, 1980 (94 Stat.
133, 138); Aug. 13, 1981 (95 Stat. 433); Oct. 15, 1982 (96 Stat. 1520,
1521, 1522, 1523, 1540); Aug. 9, 1989 (103 Stat. 439); and Oct. 13,
2006 (120 Stat. 1968, 1969, 1980).]
(f) The required balance carried by a member bank
with a Federal Reserve bank may, under the regulations and subject
to such penalties as may be prescribed by the Board of Governors of
the Federal Reserve System, be checked against and withdrawn by such
member bank for the purpose of meeting existing liabilities.
[12 USC 464. As amended
by acts of Aug. 15, 1914 (38 Stat. 691); June 21, 1917 (40 Stat. 239);
Aug. 23, 1935 (49 Stat. 704); and July 7, 1942 (56 Stat. 648).]
(g) In estimating the reserve balances required
by this Act, member banks may deduct from the amount of their gross
demand deposits the amounts of balances due from other banks (except
Federal Reserve banks and foreign banks) and cash items in process
of collection payable immediately upon presentation in the United
States, within the meaning of these terms as defined by the Board
of Governors of the Federal Reserve System.
[12 USC 465. As amended
by acts of Aug. 15, 1914 (38 Stat. 691); June 12, 1917 (40 Stat. 239);
and Aug. 23, 1935 (49 Stat. 714).]
(h) National banks, or banks
organized under local laws, located in the dependency or insular possession
or any part of the United States outside the continental United States
may remain nonmember banks, and shall in that event maintain reserves
and comply with all the conditions now provided by law regulating
them; or said banks may, with the consent of the Board of Governors
of the Federal Reserve System, become member banks of any one of the
reserve districts, and shall in that event take stock, maintain reserves,
and be subject to all the other provisions of this Act.
[12 USC 466. As reenacted
without change by act of Aug. 15, 1914 (38 Stat. 692); and as amended
by acts of June 21, 1917 (40 Stat. 240); June 25, 1959 (73 Stat. 142)
and Sept. 21, 1966 (80 Stat. 824) (as amended by acts of Sept. 21,
1967 (81 Stat. 226) and Sept. 21, 1968 (82 Stat. 856)). The “continental
United States” is defined in the third paragraph of section 1 of the
Federal Reserve Act to mean the “States of the United States and the
District of Columbia.”]
