More net transaction accounts will be subject to low or no reserving next year under indexing announced Thursday by the Federal Reserve Board. These and other changes are published in a Federal Register notice that carries an effective date of Nov. 29.
The revisions affect the reserve requirement exemption amount and low reserve tranche under the agency’s Regulation D. For net transaction accounts in 2019, the first $16.3 million, up from $16.0 million in 2018, will be exempt from reserve requirements. A 3% reserve ratio will be assessed on net transaction accounts over $16.3 million up to and including $124.2 million, up from $122.3 million in 2018. A 10% reserve ratio will be assessed on net transaction accounts in excess of $124.2 million, the Fed said.
All depository institutions must hold a percentage of certain types of deposits as reserves in the form of vault cash, as a deposit in a Federal Reserve Bank, or as a deposit in a pass-through account at a correspondent institution. Reserve requirements currently are assessed on the depository institution’s net transaction accounts (mostly checking accounts); regular report are also required. The exemption amount and low reserve tranche are indexed annually based on growth in total reservable liabilities and net transaction accounts at all depository institutions.
The new low reserve tranche and reserve requirement exemption amount will apply to the 14-day reserve maintenance period that begins Jan. 17, 2019. For depository institutions that report deposit data weekly, this maintenance period corresponds to the 14-day computation period that begins Tuesday, Dec. 18, 2018. For depository institutions that report deposit data quarterly, this maintenance period corresponds to the seven-day computation period that begins Tuesday, Dec. 18, 2018.
The new values of the nonexempt deposit cutoff level (which is rising to $1.029 billion), the reserve requirement exemption amount, and the reduced reporting limit (which is rising to $2.147 billion) will be used to determine the frequency at which a depository institution submits deposit reports effective in either June or September 2019, the notice says.
Federal Reserve Board announces annual indexing of reserve requirement exemption amount and of low reserve tranche for 2019
Federal Register notice of final rule (published Oct. 30, 2018)