Title 12--Banks and Banking CHAPTER II--FEDERAL RESERVE SYSTEM PART 204--RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS (REGULATION D) |
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(a) Authority. This part is issued under the authority of section 19
(12 U.S.C. 461 et seq.) and other provisions of the Federal Reserve Act
and of section 7 of the International Banking Act of 1978 (12 U.S.C.
3105).
(b) Purpose. This part relates to reserves that depository
institutions are required to maintain for the purpose of facilitating
the implementation of monetary policy by the Federal Reserve System.
(c) Scope. (1) The following depository institutions are required to
maintain reserves in accordance with this part:
(i) Any insured bank as defined in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813(h)) or any bank that is eligible to apply
to become an insured bank under section 5 of such Act (12 U.S.C. 1815);
(ii) Any savings bank or mutual savings bank as defined in section 3
of the Federal Deposit Insurance Act (12 U.S.C. 1813(f), (g));
(iii) Any insured credit union as defined in section 101 of the
Federal Credit Union Act (12 U.S.C. 1752(7)) or any credit union that is
eligible to apply to become an insured credit union under section 201 of
such Act (12 U.S.C. 1781);
(iv) Any member as defined in section 2 of the Federal Home Loan
Bank Act (12 U.S.C. 1422(4)); and
(v) Any insured institution as defined in section 401 of the
National Housing Act (12 U.S.C. 1724(a)) or any institution which is
eligible to apply to become an insured institution under section 403 of
such Act (12 U.S.C. 1726).
(2) Except as may be otherwise provided by the Board, a foreign
bank's branch or agency located in the United States is required to
comply with the provisions of this part in the same manner and to the
same extent as if the branch or agency were a member bank, if its parent
foreign bank (i) has total worldwide consolidated bank assets in excess
of $1 billion; or (ii) is controlled by a foreign company or by a group
of foreign companies that own or control foreign banks that in the
aggregate have total worldwide consolidated bank assets in excess of $1
billion. In addition, any other foreign bank's branch located in the
United States that is eligible to apply to become an insured bank under
section 5 of the Federal Deposit Insurance Act (12 U.S.C. 1815) is
required to maintain reserves in accordance with this part as a
nonmember depository institution.
(3) Except as may be otherwise provided by the Board, an Edge
Corporation (12 U.S.C. 611 et seq.) or an Agreement Corporation (12
U.S.C. 601 et seq.) is required to comply with the provisions of this
part in the same manner and to the same extent as a member bank.
(4) This part does not apply to any financial institution that (i)
is organized solely to do business with other financial institutions;
(ii) is owned primarily by the financial institutions with which it does
business; and (iii) does not do business with the general public.
(5) The provisions of this part do not apply to any deposit that is
payable only at an office located outside the United States.
[45 FR 56018, Aug. 22, 1980]
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For purposes of this part, the following definitions apply unless
otherwise specified:
(a)(1) Deposit means:
(i) The unpaid balance of money or its equivalent received or held
by a depository institution in the usual course of business and for
which it has given or is obligated to give credit, either conditionally
or unconditionally, to an account, including interest credited, or which
is evidenced by an instrument on which the depository institution is
primarily liable;
(ii) Money received or held by a depository institution, or the
credit given for money or its equivalent received or held by the
depository institution in the usual course of business for a special or
specific purpose, regardless of the legal relationships established
thereby, including escrow funds, funds held as security for securities
loaned by the depository institution, funds deposited as advance payment
on subscriptions to United States government securities, and funds held
to meet its acceptances;
(iii) An outstanding teller's check, or an outstanding draft,
certified check,
[[Page 95]]
cashier's check, money order, or officer's check drawn on the depository
institution, issued in the usual course of business for any purpose,
including payment for services, dividends or purchases;
(iv) Any due bill or other liability or undertaking on the part of a
depository institution to sell or deliver securities to, or purchase
securities for the account of, any customer (including another
depository institution), involving either the receipt of funds by the
depository institution, regardless of the use of the proceeds, or a
debit to an account of the customer before the securities are delivered.
A deposit arises thereafter, if after three business days from the date
of issuance of the obligation, the depository institution does not
deliver the securities purchased or does not fully collateralize its
obligation with securities similar to the securities purchased. A
security is similar if it is of the same type and if it is of comparable
maturity to that purchased by the customer;
(v) Any liability of a depository institution's affiliate that is
not a depository institution, on any promissory note, acknowledgment of
advance, due bill, or similar obligation (written or oral), with a
maturity of less than one and one-half years, to the extent that the
proceeds are used to supply or to maintain the availability of funds
(other than capital) to the depository institution, except any such
obligation that, had it been issued directly by the depository
institution, would not constitute a deposit. If an obligation of an
affiliate of a depository institution is regarded as a deposit and is
used to purchase assets from the depository institution, the maturity of
the deposit is determined by the shorter of the maturity of the
obligation issued or the remaining maturity of the assets purchased. If
the proceeds from an affiliate's obligation are placed in the depository
institution in the form of a reservable deposit, no reserves need be
maintained against the obligation of the affiliate since reserves are
required to be maintained against the deposit issued by the depository
institution. However, the maturity of the deposit issued to the
affiliate shall be the shorter of the maturity of the affiliate's
obligation or the maturity of the deposit;
(vi) Credit balances;
(vii) Any liability of a depository institution on any promissory
note, acknowledgment of advance, bankers' acceptance, or similar
obligation (written or oral), including mortgage-backed bonds, that is
issued or undertaken by a depository institution as a means of obtaining
funds, except any such obligation that:
(A) Is issued or undertaken and held for the account of:
(1) An office located in the United States of another depository
institution, foreign bank, Edge or Agreement Corporation, or New York
Investment (Article XII) Company;
(2) The United States government or an agency thereof; or
(3) The Export-Import Bank of the United States, Minbanc Capital
Corporation, the Government Development Bank for Puerto Rico, a Federal
Reserve Bank, a Federal Home Loan Bank, or the National Credit Union
Administration Central Liquidity Facility;
(B) Arises from a transfer of direct obligations of, or obligations
that are fully guaranteed as to principal and interest by, the United
States Government or any agency thereof that the depository institution
is obligated to repurchase;
(C) Is not insured by a Federal agency, is subordinated to the
claims of depositors, has a weighted average maturity of five years or
more, and is issued by a depository institution with the approval of, or
under the rules and regulations of, its primary Federal supervisor;
(D) Arises from a borrowing by a depository institution from a
dealer in securities, for one business day, of proceeds of a transfer of
deposit credit in a Federal Reserve Bank or other immediately available
funds (commonly referred to as Federal funds), received by such dealer
on the date of the loan in connection with clearance of securities
transactions; or
(E) Arises from the creation, discount and subsequent sale by a
depository institution of its bankers' acceptance of the type described
in paragraph
[[Page 96]]
7 of section 13 of the Federal Reserve Act (12 U.S.C. 372).
(viii) Any liability of a depository institution that arises from
the creation after June 20, 1983, of a bankers' acceptance that is not
of the type described in paragraph 7 of section 13 of the Federal
Reserve Act (12 U.S.C. 372) except any such liability held for the
account of an entity specified in Sec. 204.2(a)(1)(vii)(A); or
(2) Deposit does not include:
(i) Trust funds received or held by the depository institution that
it keeps properly segregated as trust funds and apart from its general
assets or which it deposits in another institution to the credit of
itself as trustee or other fiduciary. If trust funds are deposited with
the commecial department of the depository institution or otherwise
mingled with its general assets, a deposit liability of the institution
is created;
(ii) An obligation that represents a conditional, contingent or
endorser's liability;
(iii) Obligations, the proceeds of which are not used by the
depository institution for purposes of making loans, investments, or
maintaining liquid assets such as cash or ``due from'' depository
institutions or other similar purposes. An obligation issued for the
purpose of raising funds to purchase business premises, equipment,
supplies, or similar assets is not a deposit;
(iv) Accounts payable;
(v) Hypothecated deposits created by payments on an installment loan
where (A) the amounts received are not used immediately to reduce the
unpaid balance due on the loan until the sum of the payments equals the
entire amount of loan principal and interest; (B) and where such amounts
are irrevocably assigned to the depository institution and cannot be
reached by the borrower or creditors of the borrower;
(vi) Dealer reserve and differential accounts that arise from the
financing of dealer installment accounts receivable, and which provide
that the dealer may not have access to the funds in the account until
the installment loans are repaid, as long as the depository institution
is not actually (as distinguished from contingently) obligated to make
credit or funds available to the dealer;
(vii) A dividend declared by a depository institution for the period
intervening between the date of the declaration of the dividend and the
date on which it is paid;
(viii) An obligation representing a pass through account, as defined
in this section;
(ix) An obligation arising from the retention by the depository
institution of no more than a 10 per cent interest in a pool of
conventional 1-4 family mortgages that are sold to third parties;
(x) An obligation issued to a State or municipal housing authority
under a loan-to-lender program involving the issuance of tax exempt
bonds and the subsequent lending of the proceeds to the depository
institution for housing finance purposes;
(xi) Shares of a credit union held by the National Credit Union
Administration or the National Credit Union Administration Central
Liquidity Facility under a statutorily authorized assistance program;
and
(xii) Any liability of a United States branch or agency of a foreign
bank to another United States branch or agency of the same foreign bank,
or the liability of the United States office of an Edge Corporation to
another United States office of the same Edge Corporation.
(b)(1) Demand deposit means a deposit that is payable on demand, or
a deposit issued with an original maturity or required notice period of
less than seven days, or a deposit representing funds for which the
depository institution does not reserve the right to require at least
seven days' written notice of an intended withdrawal. Demand deposits
may be in the form of:
(i) Checking accounts;
(ii) Certified, cashier's, teller's, and officer's checks (including
such checks issued in payment of dividends);
(iii) Traveler's checks and money orders that are primary
obligations of the issuing institution;
(iv) Checks or drafts drawn by, or on behalf of, a non-United States
office of a depository institution on an account maintained at any of
the institution's United States offices;
(v) Letters of credit sold for cash or its equivalent;
[[Page 97]]
(vi) Withheld taxes, withheld insurance and other withheld funds;
(vii) Time deposits that have matured or time deposits upon which
the contractually required notice of withdrawal as given and the notice
period has expired and which have not been renewed (either by action of
the depositor or automatically under the terms of the deposit
agreement); and
(viii) An obligation to pay, on demand or within six days, a check
(or other instrument, device, or arrangement for the transfer of funds)
drawn on the depository institution, where the account of the
institution's customer already has been debited.
(2) The term demand deposit also means deposits or accounts on which
the depository institution has reserved the right to require at least
seven days' written notice prior to withdrawal or transfer of any funds
in the account and from which the depositor is authorized to make
withdrawals or transfers in excess of the withdrawal or transfer
limitations specified in paragraph (d)(2) of this section for such an
account and the account is not a NOW account, or an ATS account or other
account that meets the criteria specified in either paragraph (b)(3)(ii)
or (iii) of this section.
(3) Demand deposit does not include:
(i) Any account that is a time deposit or a savings deposit under
this part;
(ii) Any deposit or account on which the depository institution has
reserved the right to require at least seven days' written notice prior
to withdrawal or transfer of any funds in the account and either--
(A) Is subject to check, draft, negotiable order of withdrawal,
share draft, or similar item, such as an account authorized by 12 U.S.C.
1832(a) (NOW account) and a savings deposit described in
Sec. 204.2(d)(2), provided that the depositor is eligible to hold a NOW
account; or
(B) From which the depositor is authorized to make transfers by
preauthorized transfer or telephonic (including data transmission)
agreement, order or instruction to another account or to a third party,
provided that the depositor is eligible to hold a NOW account;
(iii) Any deposit or account on which the depository institution has
reserved the right to require at least seven days' written notice prior
to withdrawal or transfer of any funds in the account and from which
withdrawals may be made automatically through payment to the depository
institution itself or through transfer of credit to a demand deposit or
other account in order to cover checks or drafts drawn upon the
institution or to maintain a specified balance in, or to make periodic
transfers to such other account, such as accounts authorized by 12
U.S.C. 371a (automatic transfer account or ATS account), provided that
the depositor is eligible to hold an ATS account; or
(iv) IBF time deposits meeting the requirements of Sec. 204.8(a)(2).
(c)(1) Time deposit means:
(i) A deposit that the depositor does not have a right and is not
permitted to make withdrawals from within six days after the date of
deposit unless the deposit is subject to an early withdrawal penalty of
at least seven days' simple interest on amounts withdrawn within the
first six days after deposit.\1\
[[Page 98]]
A time deposit from which partial early withdrawals are permitted must
impose additional early withdrawal penalties of at least seven days'
simple interest on amounts withdrawn within six days after each partial
withdrawal. If such additional early withdrawal penalties are not
imposed, the account ceases to be a time deposit. The account may become
a savings deposit if it meets the requirements for a saving deposit;
otherwise it becomes a transaction account. Time deposit includes
funds--
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\1\ A time deposit, or a portion thereof, may be paid during the
period when an early withdrawal penalty would otherwise be required
under this part without imposing an early withdrawal penalty specified
by this part:
(a) Where the time deposit is maintained in an individual retirement
account established in accordance with 26 U.S.C. 408 and is paid within
seven days after establishment of the individual retirement account
pursuant to 26 CFR 1.408-6(d)(4), where it is maintained in a Keogh
(H.R. 10) plan, or where it is maintained in a 401(k) plan under 26
U.S.C. 401(k); Provided that the depositor forfeits an amount at least
equal to the simple interest earned on the amount withdrawn;
(b) Where the depository institution pays all or a portion of a time
deposit representing funds contributed to an individual retirement
account or a Keogh (H.R.10) plan established pursuant to 26 U.S.C. 408
or 26 U.S.C. 401 or to a 401(k) plan established pursuant to 26 U.S.C.
401(k) when the individual for whose benefit the account is maintained
attains age 59\1/2\ or is disabled (as defined in 26 U.S.C. 72(m)(7)) or
thereafter;
(c) Where the depository institution pays that portion of a time
deposit on which federal deposit insurance has been lost as a result of
the merger of two or more federally insured banks in which the depositor
previously maintained separate time deposits, for a period of one year
from the date of the merger;
(d) Upon the death of any owner of the time deposit funds;
(e) When any owner of the time deposit is determined to be legally
incompetent by a court or other administrative body of competent
jurisdiction; or
(f) Where a time deposit is withdrawn within ten days after a
specified maturity date even though the deposit contract provided for
automatic renewal at the maturity date.
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(A) Payable on a specified date not less than seven days after the
date of deposit;
(B) Payable at the expiration of a specified time not less than
seven days after the date of deposit;
(C) Payable only upon written notice that is actually required to be
given by the depositor not less than seven days prior to withdrawal;
(D) Held in club accounts (such as Christmas club accounts and
vacation club accounts that are not maintained as savings deposits) that
are deposited under written contracts providing that no withdrawal shall
be made until a certain number of periodic deposits have been made
during a period of not less than three months even though some of the
deposits may be made within six days from the end of the period; or
(E) Share certificates and certificates of indebtedness issued by
credit unions, and certificate accounts and notice accounts issued by
savings and loan associations;
(ii) A savings deposit;
(iii) An IBF time deposit meeting the requirements of
Sec. 204.8(a)(2); and
(iv) Borrowings, regardless of maturity, represented by a promissory
note, an acknowledgment of advance, or similar obligation described in
Sec. 204.2(a)(1)(vii) that is issued to, or any bankers' acceptance
(other than the type described in 12 U.S.C. 372) of the depository
institution held by--
(A) Any office located outside the United States of another
depository institution or Edge or agreement corporation organized under
the laws of the United States;
(B) Any office located outside the United States of a foreign bank;
(C) A foreign national government, or an agency or instrumentality
thereof,\2\ engaged principally in activities which are ordinarily
performed in the United States by governmental entities;
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\2\ Other than states, provinces, municipalities, or other regional
or local governmental units or agencies or instrumentalities thereof.
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(D) An international entity of which the United States is a member;
or
(E) Any other foreign, international, or supranational entity
specifically designated by the Board.\3\
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\3\ The designated entities are specified in 12 CFR 204.125.
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(2) A time deposit may be represented by a transferable or
nontransferable, or a negotiable or nonnegotiable, certificate,
instrument, passbook, or statement, or by book entry or otherwise.
(d)(1) Savings deposit means a deposit or account with respect to
which the depositor is not required by the deposit contract but may at
any time be required by the depository institution to give written
notice of an intended withdrawal not less than seven days before
withdrawal is made, and that is not payable on a specified date or at
the expiration of a specified time after the date of deposit. The term
savings deposit includes a regular share account at a credit union and a
regular account at a savings and loan association.
(2) The term savings deposit also means: A deposit or account, such
as an account commonly known as a passbook savings account, a statement
savings account, or as a money market deposit account (MMDA), that
otherwise meets the requirements of Sec. 204.2(d)(1) and from which,
under the terms of the deposit contract or by practice of the depository
institution, the depositor is permitted or authorized to make no
[[Page 99]]
more than six transfers and withdrawals, or a combination of such
transfers and withdrawals, per calendar month or statement cycle (or
similar period) of at least four weeks, to another account (including a
transaction account) of the depositor at the same institution or to a
third party by means of a preauthorized or automatic transfer, or
telephonic (including data transmission) agreement, order or
instruction, and no more than three of the six such transfers may be
made by check, draft, debit card, or similar order made by the depositor
and payable to third parties. A preauthorized transfer includes any
arrangement by the depository institution to pay a third party from the
account of a depositor upon written or oral instruction (including an
order received through an automated clearing house (ACH)) or any
arrangement by a depository institution to pay a third party from the
account of the depositor at a predetermined time or on a fixed schedule.
Such an account is not a transaction account by virtue of an arrangement
that permits transfers for the purpose of repaying loans and associated
expenses at the same depository institution (as originator or servicer)
or that permits transfers of funds from this account to another account
of the same depositor at the same institution or permits withdrawals
(payments directly to the depositor) from the account when such
transfers or withdrawals are made by mail, messenger, automated teller
machine, or in person or when such withdrawals are made by telephone
(via check mailed to the depositor) regardless of the number of such
transfers or withdrawals.\4\
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\4\ In order to ensure that no more than the permitted number of
withdrawals or transfers are made, for an account to come within the
definition in paragraph (d)(2) of this section, a depository institution
must either:
(a) Prevent withdrawals or transfers of funds from this account that
are in excess of the limits established by paragraph (d)(2) of this
section, or
(b) Adopt procedures to monitor those transfers on an ex post basis
and contact customers who exceed the established limits on more than an
occasional basis.
For customers who continue to violate those limits after they have
been contacted by the depository institution, the depository institution
must either close the account and place the funds in another account
that the depositor is eligible to maintain, or take away the transfer
and draft capacities of the account.
An account that authorizes withdrawals or transfers in excess of the
permitted number is a transaction account regardless of whether the
authorized number of transactions are actually made. For accounts
described in paragraph (d)(2) of this section, the institution at its
option may use, on a consistent basis, either the date on the check,
draft, or similar item, or the date the item is paid in applying the
limits imposed by that section.
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(3) A deposit may continue to be classified as a savings deposit
even if the depository institution exercises its right to require notice
of withdrawal.
(4) Savings deposit does not include funds deposited to the credit
of the depository institution's own trust department where the funds
involved are utilized to cover checks or drafts. Such funds are
transaction accounts.
(e) Transaction account means a deposit or account from which the
depositor or account holder is permitted to make transfers or
withdrawals by negotiable or transferable instrument, payment order of
withdrawal, telephone transfer, or other similar device for the purpose
of making payments or transfers to third persons or others or from which
the depositor may make third party payments at an automated teller
machine (ATM) or a remote service unit, or other electronic device,
including by debit card, but the term does not include savings deposits
or accounts described in paragraph (d)(2) of this section even though
such accounts permit third party transfers. Transaction account
includes:
(1) Demand deposits;
(2) Deposits or accounts on which the depository institution has
reserved the right to require at least seven days' written notice prior
to withdrawal or transfer of any funds in the account and that are
subject to check, draft, negotiable order of withdrawal, share draft, or
other similar item, except accounts described in paragraph (d)(2) of
this section (savings deposits), but including accounts authorized by 12
U.S.C. 1832(a) (NOW accounts).
(3) Deposits or accounts on which the depository institution has
reserved the right to require at least seven days'
[[Page 100]]
written notice prior to withdrawal or transfer of any funds in the
account and from which withdrawals may be made automatically through
payment to the depository institution itself or through transfer or
credit to a demand deposit or other account in order to cover checks or
drafts drawn upon the institution or to maintain a specified balance in,
or to make periodic transfers to such accounts, except accounts
described in paragraph (d)(2) of this section, but including accounts
authorized by 12 U.S.C. 371a (automatic transfer accounts or ATS
accounts).
(4) Deposits or accounts on which the depository institution has
reserved the right to require at least seven days' written notice prior
to withdrawal or transfer of any funds in the account and under the
terms of which, or by practice of the depository institution, the
depositor is permitted or authorized to make more than six withdrawals
per month or statement cycle (or similar period) of at least four weeks
for the purposes of transferring funds to another account of the
depositor at the same institution (including transaction account) or for
making payment to a third party by means of a preauthorized transfer, or
telephonic (including data transmission) agreement, order or
instruction, except accounts described in paragraph (d)(2) of this
section. An account that authorizes more than six such withdrawals in a
calendar month, or statement cycle (or similar period) of at least four
weeks, is a transaction account whether or not more than six such
transfers are made during such period. A preauthorized transfer includes
any arrangement by the depository institution to pay a third party from
the account of a depositor upon written or oral instruction (including
an order received through an automated clearing house (ACH)), or any
arrangement by a depository institution to pay a third party from the
account of the depositor at a predetermined time or on a fixed schedule.
Such an account is not a transaction account by virtue of an arrangement
that permits transfers for the purpose of repaying loans and associated
expenses at the same depository institution (as originator or servicer)
or that permits transfers of funds from this account to another account
of the same depositor at the same institution or permits withdrawals
(payments directly to the depositor) from the account when such
transfers or withdrawals are made by mail, messenger, automated teller
machine or in person or when such withdrawals are made by telephone (via
check mailed to the depositor) regardless of the number of such
transfers or withdrawals.
(5) Deposits or accounts maintained in connection with an
arrangement that permits the depositor to obtain credit directly or
indirectly through the drawing of a negotiable or nonnegotiable check,
draft, order or instruction or other similar device (including telephone
or electronic order or instruction) on the issuing institution that can
be used for the purpose of making payments or transfers to third persons
or others or to a deposit account of the depositor.
(6) All deposits other than time and savings accounts, including
those accounts that are time and savings deposits in form but that the
Board has determined, by rule or order, to be transaction accounts.
(f)(1) Nonpersonal time deposit means:
(i) A time deposit, including an MMDA or any other savings deposit,
representing funds in which any beneficial interest is held by a
depositor which is not a natural person;
(ii) A time deposit, including an MMDA or any other savings deposit,
that represents funds deposited to the credit of a depositor that is not
a natural person, other than a deposit to the credit of a trustee or
other fiduciary if the entire beneficial interest in the deposit is held
by one or more natural persons;
(iii) A transferable time deposit. A time deposit is transferable
unless it contains a specific statement on the certificate, instrument,
passbook, statement or other form representing the account that it is
not transferable. A time deposit that contains a specific statement that
it is not transferable is not regarded as transferable even if the
following transactions can be effected: a pledge as collateral for a
loan, a
[[Page 101]]
transaction that occurs due to circumstances arising from death,
incompetency, marriage, divorce, attachment, or otherwise by operation
of law or a transfer on the books or records of the institution; and
(iv) A time deposit represented by a promissory note, an
acknowledgment of advance, or similar obligation described in paragraph
(a)(1)(vii) of this section that is issued to, or any bankers'
acceptance (other than the type described in 12 U.S.C. 372) of the
depository institution held by:
(A) Any office located outside the United States of another
depository institution or Edge or agreement corporation organized under
the laws of the United States;
(B) Any office located outside the United States of a foreign bank;
(C) A foreign national government, or an agency or instrumentality
thereof,\5\ engaged principally in activities which are ordinarily
performed in the United States by governmental entities;
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\5\ Other than states, provinces, municipalities, or other regional
or local governmental units or agencies or instrumentalities thereof.
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(D) An international entity of which the United States is a member;
or
(E) Any other foreign, international, or supranational entity
specifically designated by the Board.\6\
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\6\ The designated entities are specified in 12 CFR 217.126.
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(2) Nonpersonal time deposit does not include nontransferable time
deposits to the credit of or in which the entire beneficial interest is
held by an individual pursuant to an individual retirement account or
Keogh (H.R. 10) plan under 26 U.S.C. 408, 401, or non-transferable time
deposits held by an employer as part of an unfunded deferred-
compensation plan established pursuant to subtitle D of the Revenue Act
of 1978 (Pub. L. 95-600, 92 Stat. 2763), or a 401(k) plan under 26
U.S.C. 401(k).
(g) Natural person means an individual or a sole proprietorship. The
term does not mean a corporation owned by an individual, a partnership
or other association.
(h) Eurocurrency liabilities means:
(1) For a depository institution or an Edge or Agreement Corporation
organized under the laws of the United States, the sum, if positive, of
the following:
(i) Net balances due to its non-United States offices and its
international banking facilities (IBFs) from its United States offices;
(ii)(A) For a depository institution organized under the laws of the
United States, assets (including participations) acquired from its
United States offices and held by its non-United States offices, by its
IBF, or by non-United States offices of an affiliated Edge or Agreement
Corporation; \7\ or
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\7\ This paragraph does not apply to assets that were acquired by an
IBF from its establishing entity before the end of the second reserve
computation period after its establishment.
---------------------------------------------------------------------------
(B) For an Edge or Agreement Corporation, assets (including
participations) acquired from its United States offices and held by its
non-United States offices, by its IBF, by non-United States offices of
its U.S. or foreign parent institution, or by non-United States offices
of an affiliated Edge or Agreement Corporation; and
(iii) Credit outstanding from its non-United States offices to
United States residents (other than assets acquired and net balances due
from its United States offices), except credit extended (A) from its
non-United States offices in the aggregate amount of $100,000 or less to
any United States resident, (B) by a non-United States office that at no
time during the computation period had credit outstanding to United
States residents exceeding $1 million, (C) to an international banking
facility, or (D) to an institution that will be maintaining reserves on
such credit pursuant to this part. Credit extended from non-United
States offices or from IBFs to a foreign branch, office, subsidiary,
affiliate of other foreign establishment (foreign affiliate) controlled
by one or more domestic corporations is not regarded as credit extended
to a United States resident if the proceeds will be used to finance the
operations outside the United States of the borrower or of other foreign
affiliates of the controlling domestic corporation(s).
(2) For a United States branch or agency of a foreign bank, the sum,
if positive, of the following:
[[Page 102]]
(i) Net balances due to its foreign bank (including offices thereof
located outside the United States) and its international banking
facility after deducting an amount equal to 8 per cent of the following:
the United States branch's or agency's total assets less the sum of (A)
cash items in process of collection; (B) unposted debits; (C) demand
balances due from depository institutions organized under the laws of
the United States and from other foreign banks; (D) balances due from
foreign central banks; and (E) positive net balances due from its IBF,
its foreign bank, and the foreign bank's United States and non-United
States offices; and
(ii) Assets (including participations) acquired from the United
States branch or agency (other than assets required to be sold by
Federal or State supervisory authorities) and held by its foreign bank
(including offices thereof located outside the United States), by its
parent holding company, by non-United States offices or an IBF of an
affiliated Edge or Agreement Corporation, or by its IBFs.\8\
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\8\ See footnote 7.
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(i)(1) Cash item in process of collection means:
(i) Checks in the process of collection, drawn on a bank or other
depository institution that are payable immediately upon presentation in
the United States, including checks forwarded to a Federal Reserve Bank
in process of collection and checks on hand that will be presented for
payment or forwarded for collection on the following business day;
(ii) Government checks drawn on the Treasury of the United States
that are in the process of collection; and
(iii) Such other items in the process of collection, that are
payable immediately upon presentation in the United States and that are
customarily cleared or collected by depository institutions as cash
items, including:
(A) Drafts payable through another depository institution;
(B) Matured bonds and coupons (including bonds and coupons that have
been called and are payable on presentation);
(C) Food coupons and certificates;
(D) Postal and other money orders, and traveler's checks;
(E) Amounts credited to deposit accounts in connection with
automated payment arrangements where such credits are made one business
day prior to the scheduled payment date to insure that funds are
available on the payment date;
(F) Commodity or bill of lading drafts payable immediately upon
presentation in the United States;
(G) Returned items and unposted debits; and
(H) Broker security drafts.
(2) Cash item in process of collection does not include items
handled as noncash collections and credit card sales slips and drafts.
(j) Net transaction accounts means the total amount of a depository
institution's transaction accounts less the deductions allowed under the
provisions of Sec. 204.3.
(k)(1) Vault cash means United States currency and coin owned and
held by a depository institution that may, at any time, be used to
satisfy depositors' claims.
(2) Vault cash includes United States currency and coin in transit
to a Federal Reserve Bank or a correspondent depository institution for
which the reporting depository institution has not yet received credit,
and United States currency and coin in transit from a Federal Reserve
Bank or a correspondent depository institution when the reporting
depository institution's account at the Federal Reserve or correspondent
bank has been charged for such shipment.
(3) Silver and gold coin and other currency and coin whose
numismatic or bullion value is substantially in excess of face value is
not vault cash for purposes of this part.
(l) Pass through account means a balance maintained by a depository
institution that is not a member bank, by a U.S. branch or agency of a
foreign bank, or by an Edge or Agreement Corporation, (1) in an
institution that maintains required reserve balances at a Federal
Reserve Bank, (2) in a Federal Home Loan Bank, (3) in the National
Credit Union Administration Central Liquidity Facility, or (4) in an
institution that has been authorized by
[[Page 103]]
the Board to pass through required reserve balances if the institution,
Federal Home Loan Bank, or National Credit Union Administration Central
Liquidity Facility maintains the funds in the form of a balance in a
Federal Reserve Bank of which it is a member or at which it maintains an
account in accordance with rules and regulations of the Board.
(m)(1) Depository institution means:
(i) Any insured bank as defined in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813(h)) or any bank that is eligible to apply
to become an insured bank under section 5 of such Act (12 U.S.C. 1815);
(ii) Any savings bank or mutual savings bank as defined in section 3
of the Federal Deposit Insurance Act (12 U.S.C. 1813(f), (g));
(iii) Any insured credit union as defined in section 101 of the
Federal Credit Union Act (12 U.S.C. 1752(7)) or any credit union that is
eligible to apply to become an insured credit union under section 201 of
such Act (12 U.S.C. 1781);
(iv) Any member as defined in section 2 of the Federal Home Loan
Bank Act (12 U.S.C. 1422(4)); and
(v) Any insured institution as defined in section 401 of the
National Housing Act (12 U.S.C. 1724(a)) or any institution which is
eligible to apply to become an insured institution under section 403 of
such Act (12 U.S.C. 1726).
(2) Depository institution does not include international
organizations such as the World Bank, the Inter-American Development
Bank, and the Asian Development Bank.
(n) Member bank means a depository institution that is a member of
the Federal Reserve System.
(o) Foreign bank means any bank or other similar institution
organized under the laws of any country other than the United States or
organized under the laws of Puerto Rico, Guam, American Samoa, the
Virgin Islands, or other territory or possession of the United States.
(p) [Reserved]
(q) Affiliate includes any corporation, association, or other
organization:
(1) Of which a depository institution, directly or indirectly, owns
or controls either a majority of the voting shares or more than 50
percent of the numbers of shares voted for the election of its
directors, trustees, or other persons exercising similar functions at
the preceding election, or controls in any manner the election of a
majority of its directors, trustees, or other persons exercising similar
functions;
(2) Of which control is held, directly or indirectly, through stock
ownership or in any other manner, by the shareholders of a depository
institution who own or control either a majority of the shares of such
depository institution or more than 50 percent of the number of shares
voted for the election of directors of such depository institution at
the preceding election, or by trustees for the benefit of the
shareholders of any such depository institution;
(3) Of which a majority of its directors, trustees, or other persons
exercising similar functions are directors of any one depository
institution; or
(4) Which owns or controls, directly or indirectly, either a
majority of the shares of capital stock of a depository institution or
more than 50 percent of the number of shares voted for the election of
directors, trustees or other persons exercising similar functions of a
depository institution at the preceding election, or controls in any
manner the election of a majority of the directors, trustees, or other
persons exercising similar functions of a depository institution, or for
the benefit of whose shareholders or members all or substantially all
the capital stock of a depository institution is held by trustees.
(r) United States means the States of the United States and the
District of Columbia.
(s) United States resident means (1) any individual residing (at the
time of the transaction) in the United States; (2) any corporation,
partnership, association or other entity organized in the United States
(domestic corporation); and (3) any branch or office located in the
United States of any entity that is not organized in the United States.
(t) Any deposit that is payable only at an office located outside
the United States means (1) a deposit of a United States
[[Page 104]]
resident \9\ that is in a denomination of $100,000 or more, and as to
which the depositor is entitled, under the agreement with the
institution, to demand payment only outside the United States or (2) a
deposit of a person who is not a United States resident \9\ as to which
the depositor is entitled, under the agreement with the institution, to
demand payment only outside the United States.
---------------------------------------------------------------------------
\9\ A deposit of a foreign branch, office, subsidiary, affiliate or
other foreign establishment (foreign affiliate) controlled by one or
more domestic corporations is not regarded as a deposit of a United
States resident if the funds serve a purpose in connection with its
foreign or international business or that of other foreign affiliates of
the controlling domestic corporation(s).
---------------------------------------------------------------------------
(u) Teller's check means a check drawn by a depository institution
on another depository institution, a Federal Reserve Bank, or a Federal
Home Loan Bank, or payable at or through a depository institution, a
Federal Reserve Bank, or a Federal Home Loan Bank, and which the drawing
depository institution engages or is obliged to pay upon dishonor.
[Reg. D, 45 FR 56018, Aug. 22, 1980, as amended at 46 FR 27092, May 18,
1981; 46 FR 32428, June 23, 1981; 47 FR 44707, Oct. 12, 1982; 48 FR
28973, June 24, 1983; 51 FR 9632, 9635, Mar. 20, 1986; 52 FR 47694,
47695, Dec. 16, 1987; 55 FR 50541, Dec. 7, 1990; 56 FR 15494, Apr. 17,
1991; 57 FR 38427, Aug. 25, 1992; 57 FR 40598, Sept. 4, 1992; 61 FR
69025, Dec. 31, 1996; 63 FR 64841, Nov. 24, 1998]
|
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(a) Maintenance and reporting of required reserves. (1) Maintenance.
A depository institution, a U.S. branch or agency of a foreign bank, and
an Edge or Agreement corporation shall maintain reserves against its
deposits and Eurocurrency liabilities in accordance with the procedures
prescribed in this section and Sec. 204.4 and the ratios prescribed in
Sec. 204.9. Reserve-deficiency charges shall be assessed for
deficiencies in required reserves in accordance with the provisions of
Sec. 204.7. For purposes of this part, the obligations of a majority-
owned (50 percent or more) U.S. subsidiary (except an Edge or Agreement
corporation) of a depository institution shall be regarded as
obligations of the parent depository institution.
(2) Reporting. (i) Every depository institution, U.S. branch or
agency of a foreign bank, and Edge or Agreement corporation shall file a
report of deposits (or any other required form or statement) directly
with the Federal Reserve Bank of its District, regardless of the manner
in which it chooses to maintain required reserve balances. A foreign
bank's U.S. branches and agencies and an Edge or Agreement corporation's
offices operating within the same state and the same Federal Reserve
District shall prepare and file a report of deposits on an aggregated
basis.
(ii) A Federal Reserve Bank shall notify the reporting institution
of its reserve requirements. Where a pass-through arrangement exists,
the Reserve Bank will also notify the pass-through correspondent of its
respondent's required reserve balances.
(iii) The Board and the Federal Reserve Banks will not hold a pass-
through correspondent responsible for guaranteeing the accuracy of the
reports of deposits submitted by its respondents.
(3) Allocation of low reserve tranche and exemption from reserve
requirements. A depository institution, a foreign bank, or an Edge or
Agreement corporation shall, if possible, assign the low reserve tranche
and reserve requirement exemption prescribed in Sec. 204.9(a) to only
one office or to a group of offices filing a single aggregated report of
deposits. The amount of the reserve requirement exemption allocated to
an office or group of offices may not exceed the amount of the low
reserve tranche allocated to such office or offices. If the low reserve
tranche or reserve requirement exemption cannot be fully utilized by a
single office or by a group of offices filing a single report of
deposits, the unused portion of the tranche or exemption may be assigned
to other offices or groups of offices of the same institution until the
amount of the tranche (or net transaction accounts) or exemption (or
reservable liabilities) is exhausted. The tranche or exemption may be
reallocated each year concurrent with implementation of the indexed
tranche and exemption,
[[Page 105]]
or, if necessary during the course of the year to avoid underutilization
of the tranche or exemption, at the beginning of a reserve computation
period.
(b) Form and location of reserves. (1) A depository institution, a
U.S. branch or agency of a foreign bank, and an Edge or Agreement
corporation shall hold reserves in the form of vault cash, a balance
maintained directly with the Federal Reserve Bank in the Federal Reserve
District in which it is located, or, in the case of nonmember
institutions, with a pass-through correspondent in accordance with
Sec. 204.3(i).
(2) (i) For purposes of this section, a depository institution, a
U.S. branch or agency of a foreign bank, or an Edge or Agreement
corporation is located in the Federal Reserve District that contains the
location specified in the institution's charter, organizing certificate,
or license or, if no such location is specified, the location of its
head office, unless otherwise determined by the Board under paragraph
(b)(2)(ii) of this section.
(ii) If the location specified in paragraph (b)(2)(i) of this
section, in the Board's judgment, is ambiguous, would impede the ability
of the Board or the Federal Reserve Banks to perform their functions
under the Federal Reserve Act, or would impede the ability of the
institution to operate efficiently, the Board will determine the Federal
Reserve District in which the institution is located, after consultation
with the institution and the relevant Federal Reserve Banks. The
relevant Federal Reserve Banks are the Federal Reserve Bank whose
District contains the location specified in paragraph (b)(2)(i) of this
section and the Federal Reserve Bank in whose District the institution
is proposed to be located. In making this determination, the Board will
consider any applicable laws, the business needs of the institution, the
location of the institution's head office, the locations where the
institution performs its business, and the locations that would allow
the institution, the Board, and the Federal Reserve Banks to perform
their functions efficiently and effectively.
(c) Computation of required reserves for institutions that report on
a weekly basis. (1) Required reserves are computed on the basis of daily
average balances of deposits and Eurocurrency liabilities during a 14-
day period ending every second Monday (the computation period). Reserve
requirements are computed by applying the ratios prescribed in
Sec. 204.9 to the classes of deposits and Eurocurrency liabilities of
the institution. In determining the reserve balance that is required to
be maintained with the Federal Reserve, the average daily vault cash
held during the computation period is deducted from the amount of the
institution's required reserves.
(2) The reserve balance that is required to be maintained with the
Federal Reserve shall be maintained during a 14-day period (the
``maintenance period'') that begins on the third Thursday following the
end of a given computation period.
(d) Computation of required reserves for institutions that report on
a quarterly basis. For a depository institution that is permitted to
report quarterly, required reserves are computed on the basis of the
depository institution's daily average deposit balances during a seven-
day computation period that begins on the third Tuesday of March, June,
September, and December. In determining the reserve balance that such a
depository institution is required to maintain with the Federal Reserve,
the daily average vault cash held during the computation period is
deducted from the amount of the institution's required reserves. The
reserve balance that is required to be maintained with the Federal
Reserve shall be maintained during a corresponding period that begins on
the fourth Thursday following the end of the institution's computation
period and ends on the fourth Wednesday after the close of the
institution's next computation period.
(e) Computation of transaction accounts. Overdrafts in demand
deposit or other transaction accounts are not to be treated as negative
demand deposits or negative transaction accounts and shall not be netted
since overdrafts are properly reflected on an institution's books as
assets. However, where a customer maintains multiple transaction
accounts with a depository institution, overdrafts in one account
pursuant to a
[[Page 106]]
bona fide cash management arrangement are permitted to be netted against
balances in other related transaction accounts for reserve requirement
purposes.
(f) Deductions allowed in computing reserves. (1) In determining the
reserve balance required under this part, the amount of cash items in
process of collection and balances subject to immediate withdrawal due
from other depository institutions located in the United States
(including such amounts due from United States branches and agencies of
foreign banks and Edge and agreement corporations) may be deducted from
the amount of gross transaction accounts. The amount that may be
deducted may not exceed the amount of gross transaction accounts.
(2) United States branches and agencies of a foreign bank may not
deduct balances due from another United States branch or agency of the
same foreign bank, and United States offices of an Edge or Agreement
Corporation may not deduct balances due from another United States
office of the same Edge Corporation.
(3) Balances ``due from other depository institutions'' do not
include balances due from Federal Reserve Banks, pass through accounts,
or balances (payable in dollars or otherwise) due from banking offices
located outside the United States. An institution exercising fiduciary
powers may not include in ``balances due from other depository
institutions'' amounts of trust funds deposited with other banks and due
to it as a trustee or other fiduciary.
(g) Availability of cash items as reserves. Cash items forwarded to
a Federal Reserve Bank for collection and credit shall not be counted as
part of the reserve balance to be carried with the Federal Reserve until
the expiration of the time specified in the appropriate time schedule
established under Regulation J, ``Collection of Checks and Other Items
and Transfers of Funds'' (12 CFR part 210). If a depository institution
draws against items before that time, the charge will be made to its
reserve account if the balance is sufficient to pay it; any resulting
impairment of reserve balances will be subject to the penalties provided
by law and to the reserve 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 a reserve account
for any time for which the Federal Reserve bank has not received payment
in actually and finally collected funds.
(h) Carryover of excesses or deficiencies. Any excess or deficiency
in a depository institution's account that is held directly or
indirectly with a Federal Reserve Bank shall be carried over and applied
to that account in the next maintenance period as specified in this
paragraph. The amount of any such excess or deficiency that is carried
over shall not exceed the greater of:
(1) The amount obtained by multiplying .04 times the sum of the
depository institution's required reserves and the depository
institution's required clearing balance, if any, and then subtracting
from this product the depository institution's required charge-free
band, if any; or
(2) $50,000, minus the depository institution's required charge-free
band, if any. Any carryover not offset during the next period may not be
carried over to subsequent periods.
(i) Pass-through rules. (1) Procedure. (i) A nonmember depository
institution, a U.S. branch or agency of a foreign bank, or an Edge or
Agreement corporation required to maintain reserve balances (respondent)
may select only one institution to pass through its required reserve
balances, unless otherwise permitted by Federal Reserve Bank in whose
district the respondent is located. Eligible institutions through which
respondent required reserve balances may be passed (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 required reserve balances at a Federal Reserve office. In
addition, the Board reserves the right to permit other institutions, on
a case-by-case basis, to serve as pass-through correspondents. The
correspondent chosen must subsequently pass through
[[Page 107]]
the required reserve balances of its respondents directly to a Federal
Reserve Bank. The correspondent placing funds with a Federal Reserve
Bank on behalf of respondents will be responsible for account
maintenance as described in paragraphs (i)(2) and (i)(3) of this
section.
(ii) Respondents or correspondents may institute, terminate, or
change pass-through arrangements for the maintenance of required reserve
balances by providing all documentation required for the establishment
of the new arrangement or termination of the existing arrangement to the
Federal Reserve Banks involved within the time period provided for such
a change by those Reserve Banks.
(2) Account maintenance. A correspondent that passes through
required reserve balances of respondents shall maintain such balances,
along with the correspondent's own required reserve balances (if any),
in a single commingled account at the Federal Reserve Bank in whose
District the correspondent is located, unless otherwise permitted by the
Reserve Bank. The balances held by the correspondent in an account at a
Reserve Bank 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 reserve balances of another institution
that have been passed through the correspondent.
(3) Responsibilities of parties. (i) Each individual depository
institution, U.S. branch or agency of a foreign bank, or Edge or
Agreement corporation is responsible for maintaining its required
reserve balance either directly with a Federal Reserve Bank or through a
pass-through correspondent.
(ii) A pass-through correspondent shall be responsible for assuring
the maintenance of the appropriate aggregate level of its respondents'
required reserve balances. A Federal Reserve Bank will compare the total
reserve balance required to be maintained in each account with the total
actual reserve balance held in such account for purposes of determining
required reserve deficiencies, imposing or waiving charges for
deficiencies in required reserves, and for other reserve maintenance
purposes. A charge for a deficiency in the aggregate level of the
required reserve balance will be imposed by the Reserve Bank on the
correspondent maintaining the account.
(iii) Each correspondent is required to maintain detailed records
for each of its respondents in a manner that permits Federal Reserve
Banks to determine whether the respondent has provided a sufficient
required reserve balance to the correspondent. A correspondent passing
through a respondent's reserve balance shall maintain records and make
such reports as the Board or Reserve Bank requires in order to insure
the correspondent's compliance with its responsibilities for the
maintenance of a respondent's reserve balance. Such records shall be
available to the Reserve Banks as required.
(iv) The Federal Reserve Bank may terminate any pass-through
relationship in which the correspondent is deficient in its
recordkeeping or other responsibilities.
(v) Interest paid on supplemental reserves (if such reserves are
required under Sec. 204.6) held by a respondent will be credited to the
account maintained by the correspondent.
[45 FR 56018, Aug. 22, 1980, as amended at 45 FR 58100, Sept. 2, 1980;
45 FR 81537, Dec. 11, 1980; 46 FR 32430, June 23, 1981; 47 FR 44707,
Oct. 12, 1982; 47 FR 55206, Dec. 8, 1982; 48 FR 17335, 17336, Apr. 22,
1983; 51 FR 9635, Mar. 20, 1986; 55 FR 50541, Dec. 7, 1990; 57 FR 38417,
38427, Aug. 25, 1992; 61 FR 69025, Dec. 31, 1996; 62 FR 34616, June 27,
1997; 62 FR 59778, Nov. 5, 1997; 63 FR 15071, Mar. 30, 1998]
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|
Sec. 204.4 Transitional adjustments in
mergers. |
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In cases of mergers and consolidations of depository institutions,
the amount of reserves that shall be maintained by the surviving
institution shall be reduced by an amount determined by multiplying the
amount by which the required reserves during the computation period
immediately preceding the date of the merger (computed as if the
depository institutions had merged) exceeds the sum of the actual
required reserves of each depository institution during the same
computation period, times the appropriate percentage as specified in the
following schedule:
[[Page 108]]
------------------------------------------------------------------------
Percentage
applied to
difference
Maintenance periods occurring during quarters following to compute
merger or consolidation amount to
be
subtracted
------------------------------------------------------------------------
1........................................................... 87.5
2........................................................... 75.0
3........................................................... 62.5
4........................................................... 50.0
5........................................................... 37.5
6........................................................... 25.0
7........................................................... 12.5
8 and succeeding............................................ 0
------------------------------------------------------------------------
[61 FR 69025, Dec. 31, 1996] |
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Sec. 204.5 Emergency reserve requirement. |
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(a) Finding by Board. The Board may impose, after consulting with
the appropriate committees of Congress, additional reserve requirements
on depository institutions at any ratio on any liability upon a finding
by at least five members of the Board that extraordinary circumstances
require such action.
(b) Term. Any action taken under this section shall be valid for a
period not exceeding 180 days, and may be extended for further periods
of up to 180 days each by affirmative action of at least five members of
the Board for each extension.
(c) Reports to Congress. The Board shall transmit promptly to
Congress a report of any exercise of its authority under this paragraph
and the reasons for the exercise of authority.
(d) Reserve requirements. At present, there are no emergency reserve
requirements imposed under this section.
[45 FR 56018, Aug. 22, 1980] |
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|
Sec. 204.6
Supplemental reserve requirement. |
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(a) Finding by Board. Upon the affirmative vote of at least five
members of the Board and after consultation with the Board of Directors
of the Federal Deposit Insurance Corporation, the Federal Home Loan Bank
Board, and the National Credit Union Administration Board, the Board may
impose a supplemental reserve requirement on every depository
institution of not more than 4 percent of its total transaction
accounts. A supplemental reserve requirement may be imposed if:
(1) The sole purpose of the requirement is to increase the amount of
reserves maintained to a level essential for the conduct of monetary
policy;
(2) The requirement is not imposed for the purpose of reducing the
cost burdens resulting from the imposition of basic reserve
requirements;
(3) Such requirement is not imposed for the purpose of increasing
the amount of balances needed for clearing purposes; and
(4) On the date on which supplemental reserve requirements are
imposed, the total amount of basic reserve requirements is not less than
the amount of reserves that would be required on transaction accounts
and nonpersonal time deposits under the initial reserve ratios
established by the Monetary Control Act of 1980 (Pub. L. 96-221) in
effect on September 1, 1980.
(b) Term. (1) If a supplemental reserve requirement has been imposed
for a period of one year or more, the Board shall review and determine
the need for continued maintenance of supplemental reserves and shall
transmit annual reports to the Congress regarding the need for
continuing such requirement.
(2) Any supplemental reserve requirement shall terminate at the
close of the first 90-day period after the requirement is imposed during
which the average amount of supplemental reserves required are less than
the amount of reserves which would be required if the ratios in effect
on September 1, 1980, were applied.
(c) Earnings Participation Account. A depository institutions's
supplemental reserve requirement shall be maintained by the Federal
Reserve Banks in an Earnings Participation Account. Such balances shall
receive earnings to be paid by the Federal Reserve Banks during each
calendar quarter at a rate not to exceed the rate earned on the
securities portfolio of the Federal Reserve System during the previous
calendar quarter. Additional rules and regulations maybe prescribed by
the Board concerning the payment of earnings on Earnings Participation
Accounts by Federal Reserve Banks.
[[Page 109]]
(d) Report to Congress. The Board shall transmit promptly to the
Congress a report stating the basis for exercising its authority to
require a supplemental reserve under this section.
(e) Reserve requirements. At present, there are no supplemental
reserve requirements imposed under this section.
[45 FR 56018, Aug. 22, 1980, as amended at 45 FR 81537, Dec. 11, 1980]
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|
Sec. 204.7
Penalties. |
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(a) Charges for deficiencies--(1) Assessment of charges.
Deficiencies in a depository institution's required reserve balance,
after application of the carryover provided in Sec. 204.3(h) are subject
to reserve deficiency charges. Federal Reserve Banks are authorized to
assess charges for deficiencies in required reserves at a rate of 2
percent per year above the lowest rate in effect for borrowings from the
Federal Reserve Bank on the first day of the calendar month in which the
deficiencies occurred. Charges shall be assessed on the basis of daily
average deficiencies during each maintenance period. Reserve Banks may,
as an alternative to levying monetary charges, after consideration of
the circumstances involved, permit a depository institution to eliminate
deficiencies in its required reserve balance by maintaining additional
reserves during subsequent reserve maintenance periods.
(2) Waivers. (i) Reserve Banks may waive the charges for reserve
deficiencies except when the deficiency arises out of a depository
institution's gross negligence or conduct that is inconsistent with the
principles and purposes of reserve requirements. Each Reserve Bank has
adopted guidelines that provide for waivers of small charges. The
guidelines also provide for waiving the charge once during a two-year
period for any deficiency that does not exceed a certain percentage of
the depository institution's required reserves. Decisions by Reserve
Banks to waive charges in other situations are based on an evaluation of
the circumstances in each individual case and the depository
institution's reserve maintenance record. If a depository institution
has demonstrated a lack of due regard for the proper maintenance of
required reserves, the Reserve Bank may decline to exercise the waiver
privilege and assess all charges regardless of amount or reason for the
deficiency.
(ii) In individual cases, where a federal supervisory authority
waives a liquidity requirement, or waives the penalty for failing to
satisfy a liquidity requirement, the Reserve Bank in the District where
the involved depository institution is located shall waive the reserve
requirement imposed under this part for such depository institution when
requested by the federal supervisory authority involved.
(b) Penalties for Violations. Violations of this part may be subject
to assessment of civil money penalties by the Board under authority of
section 19(1) of the Federal Reserve Act (12 U.S.C 505) as implemented
in 12 CFR part 263. In addition, the Board and any other Federal
financial institution supervisory authority may enforce this part with
respect to depository institutions subject to their jurisdiction under
authority conferred by law to undertake cease and desist proceedings.
[44 FR 56018, Aug. 22, 1980, as amended at 56 FR 15495, Apr. 17, 1991;
61 FR 69025, Dec. 31, 1996]
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Sec. 204.8
International banking facilities. |
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(a) Definitions. For purposes of this part, the following
definitions apply:
(1) International banking facility or IBF means a set of asset and
liability accounts segregated on the books and records of a depository
institution, United States branch or agency of a foreign bank, or an
Edge or Agreement Corporation that includes only international banking
facility time deposits and international banking facility extensions of
credit.
(2) International banking facility time deposit or IBF time deposit
means a deposit, placement, borrowing or similar obligation represented
by a promissory note, acknowledgment of advance, or similar instrument
that is not issued in negotiable or bearer form, and
(i)(A) That must remain on deposit at the IBF at least overnight;
and
(B) That is issued to
(1) Any office located outside the United States of another
depository institution organized under the laws of
[[Page 110]]
the United States or of an Edge or Agreement Corporation;
(2) Any office located outside the United States of a foreign bank;
(3) A United States office or a non-United States office of the
entity establishing the IBF;
(4) Another IBF; or
(5) A foreign national government, or an agency or instrumentality
thereof,\10\ engaged principally in activities which are ordinarily
performed in the United States by governmental entities; an
international entity of which the United States is a member; or any
other foreign international or supranational entity specifically
designated by the Board;\11\ or
---------------------------------------------------------------------------
\10\ Other than states, provinces, municipalities, or other regional
or local governmental units or agencies or instrumentalities thereof.
\11\ The designated entities are specified in 12 CFR 204.125.
---------------------------------------------------------------------------
(ii) (A) That is payable
(1) On a specified date not less than two business days after the
date of deposit;
(2) Upon expiration of a specified period of time not less than two
business days after the date of deposit; or
(3) Upon written notice that actually is required to be given by the
depositor not less than two business days prior to the date of
withdrawal;
(B) That represents funds deposited to the credit of a non-United
States resident or a foreign branch, office, subsidiary, affiliate, or
other foreign establishment (foreign affiliate) controlled by one or
more domestic corporations provided that such funds are used only to
support the operations outside the United States of the depositor or of
its affiliates located outside the United States; and
(C) That is maintained under an agreement or arrangement under which
no deposit or withdrawal of less than $100,000 is permitted, except that
a withdrawal of less than $100,000 is permitted if such withdrawal
closes an account.
(3) International banking facility extension of credit or IBF loan
means any transaction where an IBF supplies funds by making a loan, or
placing funds in a deposit account. Such transactions may be represented
by a promissory note, security, acknowledgment of advance, due bill,
repurchase agreement, or any other form of credit transaction. Such
credit may be extended only to:
(i) Any office located outside the United States of another
depository institution organized under the laws of the United States or
of an Edge or Agreement Corporation;
(ii) Any office located outside the United States of a foreign bank;
(iii) A United States or a non-United States office of the
institution establishing the IBF;
(iv) Another IBF;
(v) A foreign national government, or an agency or instrumentality
thereof,\12\ engaged principally in activities which are ordinarily
performed in the United States by governmental entities; an
international entity of which the United States is a member; or any
other foreign international or supranational entity specifically
designated by the Board; \13\ or
---------------------------------------------------------------------------
\12\ See footnote 10.
\13\ See footnote 11.
---------------------------------------------------------------------------
(vi) A non-United States resident or a foreign branch, office,
subsidiary, affiliate or other foreign establishment (foreign affiliate)
controlled by one or more domestic corporations provided that the funds
are used only to finance the operations outside the United States of the
borrower or of its affiliates located outside the United States.
(b) Acknowledgment of use of IBF deposits and extensions of credit.
An IBF shall provide written notice to each of its customers (other than
those specified in Sec. 204.8(a)(2)(i)(B) and Sec. 204.8(a)(3) (i)
through (v)) at the time a deposit relationship or a credit relationship
is first established that it is the policy of the Board of Governors of
the Federal Reserve System that deposits received by international
banking facilities may be used only to support the depositor's
operations outside the United States as specified in
Sec. 204.8(a)(2)(ii)(B) and that extensions of credit by IBFs may be
used only to finance operations outside of the United States as
specified in Sec. 204.8(a)(3)(vi). In the case of loans to or deposits
from foreign affiliates of U.S. residents, receipt of such
[[Page 111]]
notice must be acknowledged in writing whenever a deposit or credit
relationship is first established with the IBF.
(c) Exemption from reserve requirements. An institution that is
subject to the reserve requirements of this part is not required to
maintain reserves against its IBF time deposits or IBF loans. Deposit-
taking activities of IBFs are limited to accepting only IBF time
deposits and lending activities of IBFs are restricted to making only
IBF loans.
(d) Establishment of an international banking facility. A depository
institution, an Edge or Agreement Corporation or a United States branch
or agency of a foreign bank may establish an IBF in any location where
it is legally authorized to engage in IBF business. However, only one
IBF may be established for each reporting entity that is required to
submit a Report of Transaction Accounts, Other Deposits and Vault Cash
(Form FR 2900).
(e) Notification to Federal Reserve. At least fourteen days prior to
the first reserve computation period that an institution intends to
establish an IBF it shall notify the Federal Reserve Bank of the
district in which it is located of its intent. Such notification shall
include a statement of intention by the institution that it will comply
with the rules of this part concerning IBFs, including restrictions on
sources and uses of funds, and recordkeeping and accounting
requirements. Failure to comply with the requirements of this part shall
subject the institution to reserve requirements under this part or
result in the revocation of the institution's ability to operate an IBF.
(f) Recordkeeping requirements. A depository institution shall
segregate on its books and records the asset and liability accounts of
its IBF and submit reports concerning the operations of its IBF as
required by the Board.
[46 FR 32429, June 23, 1981, as amended at 51 FR 9636, Mar. 20, 1986; 56
FR 15495, Apr. 17, 1991; 61 FR 69025, Dec. 31, 1996] |
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|
Sec. 204.9
Reserve requirement facilities. |
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(a) Reserve percentages. The following reserve ratios are prescribed
for all depository institutions, Edge and Agreement corporations, and
United States branches and agencies of foreign banks:
------------------------------------------------------------------------
Category Reserve requirement \1\
------------------------------------------------------------------------
Net transaction accounts:
$0 to $42.8 million................... 3 percent of amount.
Over $42.8 million.................... $1,284,000 plus 10 percent
of amount over $42.8
million.
Nonpersonal time deposits............. 0 percent.
Eurocurrency liabilities.............. 0 percent.
------------------------------------------------------------------------
\1\ Before deducting the adjustment to be made by the paragraph (b) of
this section.
(b) Exemption from reserve requirements. Each depository
institution, Edge or agreement corporation, and U.S. branch or agency of
a foreign bank is subject to a zero percent reserve requirement on an
amount of its transaction accounts subject to the low reserve tranche in
paragraph (a) of this section not in excess of $5.5 million determined
in accordance with Sec. 204.3(a)(3).
[Reg. D, 65 FR 69859, Nov. 21, 2000]
Interpretations
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Sec. 204.121
Bankers' banks. |
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(a)(1) The Federal Reserve Act, as amended by the Monetary Control
Act of 1980 (title I of Pub. L. 96-221), imposes Federal reserve
requirements on depository institutions that maintain transaction
accounts or nonpersonal time deposits. Under section 19(b)(9), however,
a depository institution is not required to maintain reserves if it:
(i) Is organized solely to do business with other financial
institutions;
(ii) Is owned primarily by the financial institutions with which it
does business; and
(iii) Does not do business with the general public.
Depository institutions that satisfy all of these requirements are
regarded as bankers' banks.
(2) In its application of these requirements to specific
institutions, the Board will use the following standards:
(i) A depository institution may be regarded as organized solely to
do business with other depository institutions even if, as an incidental
part to its activities, it does business to a limited extent with
entities other than depository institutions. The extent to which
[[Page 112]]
the institution may do business with other entities and continue to be
regarded as a bankers' bank is specified in paragraph (a)(2)(iii) of
this section.
(ii) A depository institution will be regarded as being owned
primarily by the institutions with which it does business if 75 per cent
or more of its capital is owned by other depository institutions. The 75
per cent or more ownership rule applies regardless of the type of
depository institution.
(iii) A depository institution will not be regarded as doing
business with the general public if it meets two conditions. First, the
range of customers with which the institution does business must be
limited to depository institutions, including subsidiaries or
organizations owned by depository institutions; directors, officers or
employees of the same or other depository institutions; individuals
whose accounts are acquired at the request of the institution's
supervisory authority due to the actual or impending failure of another
depository institution; share insurance funds; and depository
institution trade associations. Second, the extent to which the
depository institution makes loans to, or investments in, the above
entities (other than depository institutions) cannot exceed 10 per cent
of total assets, and the extent to which it receives deposits (or shares
if the institution does not receive deposits) from or issues other
liabilities to the above entities (other than depository institutions)
cannot exceed 10 per cent of total liabilities (or net worth if the
institution does not receive deposits).
If a depository institution is unable to meet all of these requirements
on a continuing basis, it will not be regarded as a bankers' bank and
will be required to satisfy Federal reserve requirements on all of its
transaction accounts and nonpersonal time deposits.
(b) (1) Section 19(c)(1) of the Federal Reserve Act, as amended by
the Monetary Control Act of 1980 (title I of Pub. L. 96-221) provides
that Federal reserve requirements may be satisfied by the maintenance of
vault cash or balances in a Federal Reserve Bank. Depository
institutions that are not members of the Federal Reserve System may also
satisfy reserve requirements by maintaining a balance in another
depository institution that maintains required reserve balances at a
Federal Reserve Bank, in a Federal Home Loan Bank, or in the National
Credit Union Administration Central Liquidity Facility if the balances
maintained by such institutions are subsequently passed through to the
Federal Reserve Bank.
(2) On August 27, 1980, the Board announced the procedures that will
apply to such pass-through arrangements (45 FR 58099). Section
204.3(i)(1) provides that the Board may permit, on a case-by-case basis,
depository institutions that are not themselves required to maintain
reserves (bankers' banks) to act as pass-through correspondents if
certain criteria are satisfied. The Board has determined that a bankers'
bank may act as a pass-through correspondent if it enters into an
agreement with the Federal Reserve to accept responsibility for the
maintenance of pass-through reserve accounts in accordance with
Regulation D (12 CFR 204.3(i)) and if the Federal Reserve is satisfied
that the quality of management and financial resources of the
institution are adequate in order to enable the institution to serve as
a pass-through correspondent in accordance with Regulation D.
Satisfaction of these criteria will assure that pass-through
arrangements are maintained properly without additional financial risk
to the Federal Reserve.
(3) In order to determine uniformly the adequacy of managerial and
financial resources, the Board will consult with the Federal supervisor
for the type of institution under consideration. Because the Board does
not possess direct experience with supervising depository institutions
other than commerical banks, and does not intend to involve itself in
the direct supervision of such institutions, it will request the
National Credit Union Administration to review requests from credit
unions that qualify as bankers' banks and the Federal Home Loan Bank
Board to review requests from savings and loan associations that qualify
as bankers' banks, regardless of charter or insurance status. (The
Board, itself, will consider requests from all commercial banks that
qualify
[[Page 113]]
as bankers' banks.) If the Federal supervisor does not find the
institution's managerial or financial resources to be adequate, the
Board will not permit the institution to act as a pass-through
correspondent. In order to assure the continued adequacy of managerial
and financial resources, it is anticipated that the appropriate Federal
supervisor will, on a periodic basis, review and evaluate the managerial
and financial resources of the institution in order to determine whether
it should continue to be permitted to act as a pass-through
correspondent. It is anticipated that, with respect to state chartered
institutions, the Federal supervisor may discuss the request with the
institute State supervisor. The Board believes that this procedure will
promote uniformity of treatment for all types of bankers' banks, and
provide consistent advice concerning managerial ability and financial
strength from supervisory authorities that are in a better position to
evaluate these criteria for depository institutions that are not
commerical banks.
(4) Requests for a determination as to whether a depository
institution will be regarded as a bankers' bank for purposes of the
Federal Reserve Act or for permission to act as a pass-through
correspondent may be addressed to the Federal Reserve Bank in whose
District the main office of the despository institution is located or to
the Secretary, Board of Governors of the Federal Reserve System,
Washington, DC 20551. The Board will act promptly on all requests
received directly or through Federal Reserve Banks.
[45 FR 69879, Oct. 22, 1980]
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Sec. 204.122
Secondary market activities of
international banking facilities. |
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(a) Questions have been raised concerning the extent to which
international banking facilities may purchase (or sell) IBF-eligible
assets such as loans (including loan participations), securities, CDs,
and bankers' acceptances from (or to) third parties. Under the Board's
regulations, as specified in Sec. 204.8 of Regulation D, IBFs are
limited, with respect to making loans and accepting deposits, to dealing
only with certain customers, such as other IBFs and foreign offices of
other organizations, and with the entity establishing the IBF. In
addition, an IBF may extend credit to a nonbank customer only to finance
the borrower's non-U.S. operations and may accept deposits from a
nonbank customer that are used only to support the depositor's non-U.S.
business.
(b) Consistent with the Board's intent, IBFs may purchase IBF-
eligible assets \1\ from, or sell such assets to, any domestic or
foreign customer provided that the transactions are at arm's length
without recourse. However, an IBF of a U.S. depository institution may
not purchase assets from, or sell such assets to, any U.S. affiliate of
the institution establishing the IBF; an IBF of an Edge or Agreement
corporation may not purchase assets from, or sell assets to, any U.S.
affiliate of the Edge or Agreement corporation or to U.S. branches of
the Edge or Agreement corporation or to U.S. branches of the Edge or
Agreement corporation other than the branch \2\ establishing the IBF;
and an IBF of a U.S. branch or agency of a foreign bank may not purchase
assets from, or sell assets to any U.S. affiliates of the foreign bank
or to any other U.S. branch or agency of the same foreign bank.\2\ (This
would not pevent an IBF from purchasing (or selling) assets directly
from (or to) any IBF, including an IBF of an affiliate, or to the
institution establishing the IBF; such purchases from the institution
establishing the IBF would continue to be subject to Eurocurrency
reserve requirements except during the initial four-week transition
period.) Since repurchase agreements are regarded as loans, transactions
involving repurchase agreements are permitted only with customers who
are otherwise eligible to deal with IBFs, as specified in Regulation D.
---------------------------------------------------------------------------
\1\ In order for an asset to be eligible to be held by an IBF, the
obligor or issuer of the instrument, or in the case of bankers'
acceptances, the customer and any endorser or acceptor, must be an IBF-
eligible customer.
\2\ Branches of Edge or Agreement corporations and agencies and
branches of foreign banks that file a consolidated report for reserve
requirements purposes (FR 2900) are considered to be the establishing
entity of an IBF.
---------------------------------------------------------------------------
[[Page 114]]
(c) In the case of purchases of assets, in order to determine that
the Board's use-of-proceeds requirement has been met, it is necessary
for the IBF (1) to ascertain that the applicable IBF notices and
acknowledgments have been provided, or (2) in the case of loans or
securities, to review the documentation underlying the loan or security,
or accompanying the security (e.g., the prospectus or offering
statement), to determine that the proceeds are being used only to
finance the obligor's operations outside the U.S., or (3) in the case of
loans, to obtain a statement from either the seller or borrower that the
proceeds are being used only to finance operations outside the U.S., or
in the case of securities, to obtain such a statement from the obligor,
or (4) in the case of bankers' acceptances, to review the underlying
documentation to determine that the proceeds are being used only to
finance the parties' operations outside the United States.
(d) Under the Board's regulations, IBFs are not permitted to issue
negotiable Euro-CDs, bankers' acceptances, or similar instruments.
Accordingly, consistent with the Board's intent in this area, IBFs may
sell such instruments issued by third parties that qualify as IBF-
eligible assets provided that the IBF, its establishing institution and
any affiliate of the institution establishing the IBF do not endorse,
accept, or otherwise guarantee the instrument.
[46 FR 62812, Dec. 29, 1981, as amended at 52 FR 47694, Dec. 16, 1987]
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|
Sec. 204.123
Sale of Federal funds by investment
companies or trusts in which the entire beneficial interest is held
exclusively by depository institutions. |
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(a) The Federal Reserve Act, as amended by the Monetary Control Act
of 1980 (Title I of Pub. L. 96-221) imposes Federal Reserve requirements
on transaction accounts and nonpersonnel time deposits held by
depository institutions. The Board is empowered under the Act to
determine what types of obligations shall be deemed a deposit.
Regulation D--Reserve Requirements of Depository Institutions exempts
from the definition of deposit those obligations of a depository
institution that are issued or undertaken and held for the account of a
domestic office of another depository institution (12 CFR
204.2(a)(1)(vii)(A)(1)). These exemptions from the definition of deposit
are known collectively as the Federal funds or interbank exemption.
(b) Title IV of the Depository Institutions Deregulation and
Monetary Control Act of 1980 authorizes Federal savings and loan
associations to invest in open-ended management investment companies
provided the funds' investment portfolios are limited to the types of
investments that a Federal savings and loan association could hold
without limit as to percentage of assets (12 U.S.C. 1464(c)(1)(Q)). Such
investments include mortgages, U.S. Government and agency securities,
securities of states and political subdivisions, sales of Federal funds
and deposits held at banks insured by the Federal Deposit Insurance
Corporation. The Federal Credit Union Act authorizes Federal credit
unions to aggregate their funds in trusts provided the trust is limited
to such investments that Federal credit unions could otherwise make.
Such investments include loans to credit union members, obligations of
the U.S. government or secured by the U.S. government, loans to other
credit unions, shares or accounts held at savings and loan associations
or mutual savings banks insured by FSLIC or FDIC, sales of Federal funds
and shares of any central credit union whose investments are
specifically authorized by the board of directors of the Federal credit
union making the investment (12 U.S.C. 1757(7)).
(c) The Board has considered whether an investment company or trust
whose entire beneficial interest is held by depository institutions, as
defined in Regulation D, would be eligible for the Federal funds
exemption from Reserve requirements and interest rate limitations. The
Board has determined that such investment companies or trusts are
eligible to participate in the Federal funds market because, in effect,
they act as mere conduits for the holders of their beneficial interest.
To be regarded by the Board as acting as a conduit and, thus, be
eligible for participation in the Federal funds market,
[[Page 115]]
an investment company or trust must meet each of the following
conditions:
(1) The entire beneficial interest in the investment company or
trust must be held by depository institutions, as defined in Regulation
D. These institutions presently may participate directly in the Federal
funds market. If the entire beneficial interest in the investment
company or trust is held only by depository institutions, the Board will
regard the investment company or trust as a mere conduit for the holders
of its beneficial interest.
(2) The assets of the investment company or trust must be limited to
investments that all of the holders of the beneficial interest could
make directly without limit.
(3) Holders of the beneficial interest in the investment company or
trust must not be allowed to make third party payments from their
accounts with the investment company or trust. The Board does not regard
an investment company or trust that offers third party payment
capabilities or other similar services which actively transform the
nature of the funds passing between the holders of the beneficial
interest and the Federal funds market as mere conduits.
The Board expects that the above conditions will be included in
materials filed by an investment company or trust with the appropriate
regulatory agencies.
(d) The Board believes that permitting sales of Federal funds by
investment companies or trusts whose beneficial interests are held
exclusively by depository institutions, that invest solely in assets
that the holders of their beneficial interests can otherwise invest in
without limit, and do not provide third party payment capabilities offer
the potential for an increased yield for thrifts. This is consistent
with Congressional intent to provide thrifts with convenient liquidity
vehicles.
[47 FR 8987, Mar. 3, 1982, as amended at 52 FR 47695, Dec. 16, 1987]
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| Sec. 204.124 Repurchase agreement involving shares of money market mutual funds whose portfolio consists wholly of United States Treasury and Federal agency securities. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(a) The Federal Reserve Act, as amended by the Monetary Control Act
of 1980 (title I of Pub. L. 96-221) imposes Federal reserve requirements
on transaction accounts and nonpersonal time deposits held by depository
institutions. The Board is empowered under the Act to determine what
types of obligations shall be deemed a deposit (12 U.S.C. 461).
Regulation D--Reserve Requirements of Depository Institutions exempts
from the definition of deposit those obligations of a depository
institution that arise from a transfer of direct obligations of, or
obligations that are fully guaranteed as to principal and interest by,
the United States government or any agency thereof that the depository
institution is obligated to repurchase (12 CFR 204.2(a)(1)(vii)(B)).
(b) The National Bank Act provides that a national bank may purchase
for its own account investment securities under limitations and
restrictions as the Comptroller may prescribe (12 U.S.C. 24, para.7).
The statute defines investment securities to mean marketable obligations
evidencing indebtedness of any person in the form of bonds, notes, and
debentures. The Act further limits a national bank's holdings of any one
security to no more than an amount equal to 10 percent of the bank's
capital stock and surplus. However, these limitations do not apply to
obligations issued by the United States, general obligations of any
state and certain obligations of Federal agencies. In addition,
generally a national bank is not permitted to purchase for its own
account stock of any corporation. These restrictions also apply to state
member banks (12 U.S.C. 335).
(c) The Comptroller of the Currency has permitted national banks to
purchase for their own accounts shares of open-end investment companies
that are purchased and sold at par (i.e., money market mutual funds)
provided the portfolios of such companies consist solely of securities
that a national
[[Page 116]]
bank may purchase directly (Banking Bulletin B-83-58). The Board of
Governors has permitted state member banks to purchase, to the extent
permitted under applicable state law, shares of money market mutual
funds (MMMF) whose portfolios consist solely of securities that the
state member bank may purchase directly (12 CFR 208.123).
(d) The Board has determined that an obligation arising from a
repurchase agreement involving shares of a MMMF whose portfolio consists
wholly of securities of the United States government or any agency
thereof \1\ would not be a deposit for purposes of Regulations D and Q.
The Board believes that a repurchase agreement involving shares of such
a MMMF is the functional equivalent of a repurchase agreement directly
involving United States government or agency obligations. A purchaser of
shares of a MMMF obtains an interest in a pro rata portion of the assets
that comprise the MMMF's portfolio. Accordingly, regardless of whether
the repurchase agreement involves United States government or agency
obligations directly or shares in a MMMF whose portfolio consists
entirely of United States government or agency obligations, an equitable
and undivided interest in United States and agency government
obligations is being transferred. Moreover, the Board believes that this
interpretation will further the purpose of the exemption in Regulations
D and Q for repurchase agreements involving United States government or
Federal obligations by enhancing the market for such obligations.
---------------------------------------------------------------------------
\1\ The term United States government or any agency thereof as used
herein shall have the same meaning as in Sec. 204.2(a)(1)(vii)(B) of
Regulation D, 12 CFR 204.2(a)(1)(vii)(B).
[50 FR 13011, Apr. 2, 1985, as amended at 52 FR 47695, Dec. 16, 1987]
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|
Sec. 204.125
Foreign, international, and supranational
entities referred to in 204.2(c)(1)(iv)(E) and 204.8(a)(2)(i)(B)(5). |
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The entities referred to in Secs. 204.2(c)(1)(iv)(E) and
204.8(a)(2)(i)(B)(5) are:
Europe
Bank for International Settlements.
European Atomic Energy Community.
European Central Bank.
European Coal and Steel Community.
The European Communities.
European Development Fund.
European Economic Community.
European Free Trade Association.
European Fund.
European Investment Bank.
Latin America
Andean Development Corporation.
Andean Subregional Group.
Caribbean Development Bank.
Caribbean Free Trade Association
Caribbean Regional Development Agency.
Central American Bank for Economic Integration.
The Central American Institute for Industrial Research and Technology.
Central American Monetary Stabilization Fund.
East Caribbean Common Market.
Latin American Free Trade Association.
Organization for Central American States.
Permanent Secretariat of the Central American General Treaty of Economic
Integration.
River Plate Basin Commission.
Africa
African Development Bank.
Banque Centrale des Etats de l'Afrique Equatorial et du Cameroun.
Banque Centrale des Etats d`Afrique del'Ouest.
Conseil de l'Entente.
East African Community.
Organisation Commune Africaine et Malagache.
Organization of African Unity.
Union des Etats de l'Afrique Centrale.
Union Douaniere et Economique de l'Afrique Centrale.
Union Douaniere des Etats de l`Afrique de l'Ouest.
Asia
Asia and Pacific Council.
Association of Southeast Asian Nations.
Bank of Taiwan.
Korea Exchange Bank.
Middle East
Central Treaty Organization.
Regional Cooperation for Development.
[Reg. D, 52 FR 47695, Dec. 16, 1987, as amended at 56 FR 15495, Apr. 17,
1991; 65 FR 12917, Mar. 10, 2000]
[[Page 117]] |
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Sec. 204.126 Depository institution participation in
"Federal funds" market. |
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(a) Under Sec. 204.2(a)(1)(vii)(A), there is an exemption from
Regulation D for member bank obligations in nondeposit form to another
bank. To assure the effectiveness of the limitations on persons who sell
Federal funds to depository institutions, Regulation D applies to
nondocumentary obligations undertaken by a depository institution to
obtain funds for use in its banking business, as well as to documentary
obligations. Under Sec. 204.2(a)(1)(vii) of Regulation D, a depository
institution's liability under informal arrangements as well as those
formally embodied in a document are within the coverage of Regulation D.
(b) The exemption in Sec. 204.2(a)(1)(vii)(A) applies to obligations
owed by a depository institution to a domestic office of any entity
listed in that section (the exempt institutions). The exempt
institutions explicitly include another depository institution, foreign
bank, Edge or agreement corporation, New York Investment (article XII)
Company, the Export-Import Bank of the United States, Minbanc Capital
Corp., and certain other credit sources. The term exempt institutions
also includes subsidiaries of depository institutions:
(1) That engage in businesses in which their parents are authorized
to engage; or
(2) The stock of which by statute is explicitly eligible for
purchase by national banks.
(c) To assure that this exemption for liabilities to exempt
institutions is not used as a means by which nondepository institutions
may arrange through an exempt institution to sell Federal funds to a
depository institution, obligations within the exemption must be issued
to an exempt institution for its own account. In view of this
requirement, a depository institution that purchases Federal funds
should ascertain the character (not necessarily the identity) of the
actual seller in order to justify classification of its liability on the
transaction as Federal funds purchased rather than as a deposit. Any
exempt institution that has given general assurance to the purchasing
depository institution that sales by it of Federal funds ordinarily will
be for its own account and thereafter executes such transactions for the
account of others, should disclose the nature of the actual lender with
respect to each such transaction. If it fails to do so, the depository
institution would be deemed by the Board as indirectly violating section
19 of the Federal Reserve Act and Regulation D.
[52 FR 47695, Dec. 16, 1987] |
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Sec. 204.127
Nondepository participation in
"Federal funds" market. |
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(a) The Board has considered whether the use of interdepository
institution loan participations (IDLPs) which involve participation by
third parties other than depository institutions in Federal funds
transactions, comes within the exemption from deposit classification for
certain obligations owed by a depository institution to an institution
exempt in Sec. 204.2(a)(1)(vii)(A) of Regulation D. An IDLP transaction
is one through which an institution that has sold Federal funds to a
depository institution, subsequently sells or participates out that
obligation to a nondepository third party without notifying the
obligated institution.
(b) The Board's interpretation regarding Federal funds transactions
(12 CFR 204.126) clarified that a depository institutions's liability
must be issued to an exempt institution described in
Sec. 204.2(a)(1)(vii)(A) of Regulation D for its own account in order to
come within the nondeposit exemption for interdepository liabilities.
The Board regards transactions which result in third parties gaining
access to the Federal funds market as contrary to the exemption
contained in Sec. 204.2(a)(1)(vii)(A) of Regulation D regardless of
whether the nondepository institution third party is a party to the
initial transaction or thereafter becomes a participant in the
transaction through purchase of all or part of the obligation held by
the selling depository institution.
(c) The Board regards the notice requirements set out in 12 CFR
204.126 as applicable to IDLP-type transactions as described herein so
that a depository institution selling Federal funds must provide to the
purchaser--
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(1) Notice of its intention, at the time of the initial transaction,
to sell or participate out its loan contract to a nondepository third
party, and
(2) Full and prompt notice whenever it (the selling depository
institution) subsequently sells or participates out its loan contract to
a non-depository third party.
[52 FR 47695, Dec. 16, 1987]
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Sec. 204.128
Deposits at foreign branches guaranteed by
domestic office of a depository institution. |
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(a) In accepting deposits at branches abroad, some depository
institutions may enter into agreements from time to time with depositors
that in effect guarantee payment of such deposits in the United States
if the foreign branch is precluded from making payment. The question has
arisen whether such deposits are subject to Regulation D, and this
interpretation is intended as clarification.
(b) Section 19 of the Federal Reserve Act which establishes reserve
requirements does not apply to deposits of a depository institution
``payable only at an office thereof located outside of the States of the
United States and the District of Columbia'' (12 U.S.C. 371a; 12 CFR
204.1(c)(5)). The Board rule in 1918 that the requirements of section 19
as to reserves to be carried by member banks do not apply to foreign
branches (1918 Fed. Res. Bull. 1123). The Board has also defined the
phrase Any deposit that is payable only at an office located outside the
United States, in Sec. 204.2(t) of Regulation D, 12 CFR 204.2(t).
(c) The Board believes that this exemption from reserve requirements
should be limited to deposits in foreign branches as to which the
depositor is entitled, under his agreement with the depository
institution, to demand payment only outside the United States,
regardless of special circumstances. The exemption is intended
principally to enable foreign branches of U.S. depository institutions
to compete on a more nearly equal basis with banks in foreign countries
in accordance with the laws and regulations of those countries. A
customer who makes a deposit that is payable solely at a foreign branch
of the depository institution assumes whatever risk may exist that the
foreign country in which a branch is located might impose restrictions
on withdrawals. When payment of a deposit in a foreign branch is
guaranteed by a promise of payment at an office in the United States if
not paid at the foreign office, the depositor no longer assumes this
risk but enjoys substantially the same rights as if the deposit had been
made in a U.S. office of the depository institution. To assure the
effectiveness of Regulation D and to prevent evasions thereof, the Board
considers that such guaranteed foreign-branch deposits must be subject
to that regulation.
(d) Accordingly, a deposit in a foreign branch of a depository
institution that is guaranteed by a domestic office is subject to the
reserve requirements of Regulation D the same as if the deposit had been
made in the domestic office. This interpretation is not designed in any
respect to prevent the head office of a U.S. bank from repaying
borrowings from, making advances to, or supplying capital funds to its
foreign branches, subject to Eurocurrency liability reserve
requirements.
[52 FR 47696, Dec. 16, 1987]
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Sec. 204.130
Eligibility for NOW accounts. |
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(a) Summary. In response to many requests for rulings, the Board has
determined to clarify the types of entities that may maintain NOW
accounts at member banks.
(b) Individuals. (1) Any individual may maintain a NOW account
regardless of the purposes that the funds will serve. Thus, deposits of
an individual used in his or her business including a sole proprietor or
an individual doing business under a trade name is eligible to maintain
a NOW account in the individual's name or in the ``DBA'' name. However,
other entities organized or operated to make a profit such as
corporations, partnerships, associations, business trusts, or other
organizations may not maintain NOW accounts.
(2) Pension funds, escrow accounts, security deposits, and other
funds held under various agency agreements may also be classified as NOW
accounts if the entire beneficial interest is held by individuals or
other entities eligible to maintain NOW accounts directly. The Board
believes that these accounts are
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similar in nature to trust accounts and should be accorded identical
treatment. Therefore, such funds may be regarded as eligible for
classification as NOW accounts.
(c) Nonprofit organizations. (1) A nonprofit organization that is
operated primarily for religious, philanthropic, charitable,
educational, political or other similar purposes may maintain a NOW
account. The Board regards the following kinds of organizations as
eligible for NOW accounts under this standard if they are not operated
for profit:
(i) Organizations described in section 501(c)(3) through (13), and
(19) of the Internal Revenue Code (26 U.S.C. (I.R.C. 1954) section
501(c)(3) through (13) and (19));
(ii) Political organizations described in section 527 of the
Internal Revenue Code (26 U.S.C. (I. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||