Fed issues new indexing for reserve requirements – even though the requirement remains 0

Even though reserve requirements for banks will stay zero, the Federal Reserve Tuesday issued the annual indexing for the reserve requirement exemption, because the law requires it, the agency said.

The publication of the technical details related to reserve requirements for depository institutions, the Fed said, do not “indicate a change in depository institutions’ reserve requirements, which will remain zero.” The indexing is required by law, the Fed stated.

However, the agency noted that if reserve requirements were not zero (as set by the Fed in February 2021), the requirement for 2023 would be set at $36.1 million, up from $32.4 million in 2022. The low reserve tranche will be set at $691.7 million, up from $640.6 million in 2022. Both amounts are derived using formulas specified in the Federal Reserve Act.

The new requirements – even though they will not be applied to banks – take effect Jan. 1, the Fed stated.

Federal Reserve Board announces annual indexing of reserve requirement exemption amount and low reserve tranche for 2023