Fed raises Reg D reserve exemption amount to $16.9 million, ups low reserve tranche, for 2020

The reserve requirement exemption and low reserve tranche established under the Federal Reserve’s Regulation D and applied to banks, savings associations, and credit unions are being adjusted upward by about 4.3% and 3.4%, respectively, for the coming year, the central bank announced Wednesday.

For depository institutions’ net transaction accounts in 2020, the first $16.9 million will be exempt from reserve requirements; that’s up from $16.3 million in 2019. The 3% reserve requirement set by Reg D will be assessed on net transaction accounts over $16.9 million up to and including $127.5 million, the Fed said (up from $124.2 million in 2019). The 10% reserve ratio will be assessed on net transaction accounts in excess of $127.5 million.

The annual adjustments are based on growth in total reservable liabilities and net transaction accounts, respectively, at all depository institutions between June 30, 2018, and June 30, 2019, the central bank said.

The new low reserve tranche and reserve requirement exemption amount will apply to the 14-day reserve maintenance period that begins Jan. 16, 2020. For depository institutions that report deposit data weekly, this maintenance period aligns with the 14-day computation period that begins Tuesday, Dec. 17, 2019. For depository institutions that report deposit data quarterly, this maintenance period aligns with the seven-day computation period that begins Tuesday, Dec. 17, 2019.

The Fed also adjusted the nonexempt deposit cutoff level and the reduced reporting limit, which are used to determine how often depository institutions are required to submit deposit reports. For 2020, the nonexempt deposit cutoff level will be $1.058 billion for 2020 (up $29 million from $1.029 billion in 2019). The reduced reporting limit will be $2.208 billion for 2020 (up $60.6 million from $2.147 billion in 2019). The increases equal 80% of the growth in total transaction accounts, savings deposits, and small time deposits of all depository institutions over the one-year period that ended June 30.

Federal Reserve Board announces annual indexing of reserve requirement exemption amount and of low reserve tranche for 2020

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