(a) (1) A depository institution,
a U.S. branch or agency of a foreign bank, and an Edge or Agreement
corporation shall satisfy reserve requirements by maintaining vault
cash and, if vault cash does not fully satisfy the institution’s reserve
requirement, in the form of a balance maintained
(i) In the
institution’s account at the Federal Reserve Bank in the Federal Reserve
District in which the institution is located, or
(ii) With a pass-through correspondent
in accordance with section 204.5(d).
(2) Each individual institution subject
to this part is responsible for satisfying its reserve balance requirement,
if any, either directly with a Federal Reserve Bank or through a pass-through
correspondent.
(b) (1) For institutions that file
a report of deposits weekly, the balances maintained to satisfy reserve
balance requirements shall be maintained during a 14-day maintenance
period that begins on the third Thursday following the end of a given
computation period.
(2) For institutions that file a report of deposits quarterly, the
balances maintained to satisfy reserve balance requirements shall
be maintained during an interval of either six or seven consecutive
14-day maintenance periods, depending on when the interval begins
and ends. The interval will begin on the fourth Thursday following
the end of each quarterly reporting period if that Thursday is the
first day of a 14-day maintenance period. If the fourth Thursday following
the end of a quarterly reporting period is not the first day of a
14-day maintenance period, then the interval will begin on the fifth
Thursday following the end of the quarterly reporting period. The
interval will end on the fourth Wednesday following the end of the
subsequent quarterly reporting period if that Wednesday is the last
day of a 14-day maintenance period. If the fourth Wednesday following
the end of the subsequent quarterly reporting period is not the last
day of a 14-day maintenance period, then the interval will conclude
on the fifth Wednesday following the end of the subsequent quarterly
reporting period.
(c) Cash items forwarded
to a Federal Reserve Bank for collection and credit are not included
in an institution’s balance maintained to satisfy its reserve balance
requirement until the expiration of the time specified in the appropriate
time schedule established under Regulation J, “Collection of Checks
and Other Items by Federal Reserve Banks and Funds Transfers Through
Fedwire” (12 CFR part 210). If a depository institution draws against
items before that time, the charge will be made to its account if
the balance is sufficient to pay it; any resulting deficiency in balances
maintained to satisfy the institution’s reserve balance requirement
will be subject to the penalties provided by law and to the deficiency
charges provided by this part. However, the Federal Reserve Bank may,
at its discretion, refuse to permit the withdrawal or other use of
credit given in an account for any time for which the Federal Reserve
Bank has not received payment in actually and finally collected funds.
(d) (1) A depository
institution, a U.S. branch or agency of a foreign bank, or an Edge
or Agreement
corporation with a reserve balance requirement (“respondent”) may
select only one pass-through correspondent under this section, unless
otherwise permitted by the Federal Reserve Bank in whose District
the respondent is located. Eligible pass-through correspondents are
Federal Home Loan Banks, the National Credit Union Administration
Central Liquidity Facility, and depository institutions, U.S. branches
or agencies of foreign banks, and Edge and Agreement corporations
that maintain balances to satisfy their own reserve balance requirements
which may be zero, in an account at a Federal Reserve Bank. In addition,
the Board reserves the right to permit other institutions, on a case-by-case
basis, to serve as pass-through correspondents.
(2) Respondents or correspondents may institute,
terminate, or change pass-through correspondent agreements by providing
all documentation required for the establishment of the new agreement
or termination of or change to the existing agreement to the Federal
Reserve Banks involved within the time period specified by those Reserve
Banks.
(3) Balances
maintained to satisfy reserve balance requirements of a correspondent’s
respondents shall be maintained along with the balances maintained
to satisfy a correspondent’s reserve balance requirement (if any),
in a single commingled account of the correspondent at the Federal
Reserve Bank in whose District the correspondent is located. Balances
maintained in the correspondent’s account are the property of the
correspondent and represent a liability of the Reserve Bank solely
to the correspondent, regardless of whether the funds represent the
balances maintained to satisfy the reserve balance requirement of
a respondent.
(4) (i) A pass-through correspondent
shall be responsible for maintaining balances to satisfy its own reserve
balance requirement (if any) and the reserve balance requirements
of all of its respondents. A charge for any deficiency in the correspondent’s
account will be imposed by the Reserve Bank on the correspondent maintaining
the account.
(ii)
Each correspondent is required to maintain detailed records for each
of its respondents that permit Reserve Banks to determine whether
the respondent has provided a sufficient funds to the correspondent
to satisfy the reserve balance requirement of the respondent. The
correspondent shall maintain such records and make such reports as
the Board or Reserve Bank may requires in order to ensure the correspondent’s
compliance with its responsibilities under this section and shall
make them available to the Board or Reserve Bank as required.
(iii) The Federal Reserve
Bank may terminate any pass-through agreement under which the correspondent
is deficient in its recordkeeping or other responsibilities.
(iv) Interest paid on supplemental
reserves (if such reserves are required under section 204.7) held
by a respondent will be credited to the account maintained by the
correspondent.
