Issued 1995
9-1574
The Committee on Federal Reserve Bank Affairs (committee) has considered
guidelines that could be used by Board staff and the committee as
input to their assessment of whether a proposal related to Federal
Reserve priced services should be subject to public comment before
adoption. These guidelines help ensure greater consistency in interpreting
the Board’s pricing principle requiring public comment “when changes
in fees and service arrangements are proposed that would have significant
longer-run effects on the nation’s payments systems.”
Public comment on matters related to Reserve
Bank priced service should be requested in the following circumstances:
1.
The
Board proposes changes to its pricing principles (at
9-1566).
2.
A
Federal Reserve Bank plans to enter a new priced service line or significantly
expand or modify an existing service line.
3.
All
Federal Reserve Banks plan to withdraw from a current service line.
4.
The
Federal Reserve Banks plan to recover less than the short-run average
variable cost for a service line over an extended period.
5.
The
Reserve Bank’s planned action is likely to have direct and material
adverse effect on the ability of other service providers to compete
effectively in providing similar services due to differing legal powers
or constraints or due to a dominant market position of the Federal
Reserve deriving from such legal differences.
6.
The
Federal Reserve proposes a significant modification to the methodology
for calculating imputed priced services costs or revenue.
7.
The contemplated action would (or is intended to) result in a significant
long-term structural change in the payments system.
These guidelines are consistent with the Board’s
intent in its pricing principle 7 (at
9-1568). The guidelines should
provide greater consistency in the types of proposals subject to public
comment. In addition, they will enable Reserve Banks to respond to
changing market conditions on a more timely basic.
These guidelines will not be rigidly applied,
but rather used at the Board’s discretion based on the particular
circumstances surrounding a given proposal. The guidelines are subject
to interpretation, and it may be expedient in certain cases to issue
a proposal for public comment even if it does not fall within one
of the categories listed above. These guidelines, however, will provide
greater consistency in determining which priced services proposals
should be issued for public comment.
Irrespective of whether proposals are subject to public
comment, it is essential that decisions regarding Federal Reserve
priced services be based on sound analysis and a clear understanding
of customer requirements. Limiting the types of proposals subject
to public comment places an additional responsibility on Reserve Bank
and Board staff to ensure that all proposals are subjected to rigorous
analysis and, where appropriate, market research before their approval.
