In April, the Federal Reserve Board issued a final rule amending Regulation D (Reserve Requirements) to create a common two-week maintenance period for all depository institutions. The implementation of the common two-week maintenance period becomes effective on Jan. 24, 2013.
Under the current Reg D, transaction account balances maintained at each depository institution are subject to reserve requirement ratios of 0%, 3%, or 10%, depending on the total dollar amount of transaction account balances at the institution.
A depository institution satisfies its reserve requirement by the amount of vault cash it maintains, and if necessary, by maintaining funds in an account at a Federal Reserve bank. The amount of funds that an institution must maintain in a Federal Reserve bank if its reserve requirement isn’t satisfied by vault cash is called the institution’s “reserve balance requirement.” An institution satisfies this requirement on average over a time period known as a “maintenance period.”
Reg D provides for two types of maintenance periods: a one-week or two-week period. Institutions submitting deposit data weekly are subject to a two-week maintenance period. Those filing deposit data quarterly, annually, or not at all (with a contractual clearing balance) are subject to a one-week maintenance period.
On Jan. 24, 2013, the two-week maintenance period will continue to apply to institutions that report their deposits weekly. Those that report their deposits quarterly will be subject to a new two-week maintenance period rather than the current one-week maintenance period. Those filing annual reports must still report one day’s worth of data, once a year, and have a reserve requirement of zero.
The Fed will provide public notice no later than Nov. 1, 2012, if it delays the January 2013 implementation date.
Visit CUNA’s e-Guide to Federal Laws and Regulations for more information on Reg D (cuna.org, and select “regulations & compliance”).