Fed finalizes rule eliminating reserve requirements

The Federal Reserve Board issued a CUNA-supported final rule on reserve requirement ratios on transaction accounts Tuesday. The final rule adopts without change the interim final rule issued by the Fed amending Regulation D to lower reserve requirement ratios on transaction accounts maintained at depository institutions to 0%.

CUNA fully supports the Federal Reserve Board eliminating reserve requirements for financial institutions. 

The Federal Reserve Board also issued proposed amendments to Regulation D which would:

• Replace references to an "interest on required reserves" ("IORR") rate and to an "interest on excess reserves" ("IOER") rate with a single "interest on reserve balances" ("IORB") rate; and
• Simplify the formula used to calculate the amount of interest paid on balances maintained by or on behalf of eligible institutions in master accounts at Federal Reserve Banks.