Circular

Uniform Cash Access Policy

May 17, 1996
Circular No. 10850

Effective May 1, 1998

To All Depository Institutions, and Others Concerned in the Second Federal Reserve District:

The following statement was issued by the Board of Governors of the Federal Reserve System:

The Federal Reserve Board has approved a new cash access policy for the Federal Reserve Banks. The new policy will provide greater consistency in the cash service levels provided by the Federal Reserve Banks to depository institutions.

The new policy becomes effective on May 1, 1998.

The policy provides for a base level of free currency access to all depository institutions, but restricts the number of offices served and the frequency of access. Under the new policy, each depository institution with a banking presence in a Federal Reserve Bank office territory can designate up to ten offices to receive free cash access (deposit and order) service from the local Reserve Bank office. Beyond the ten offices, Reserve Bank offices will provide free cash access to offices whose volumes exceed a specified volume threshold.

Normal free access for each designated office of the depository institution will continue to be once per week. Access more frequent than once per week will be available to the designated offices whose volumes exceed a specified threshold.

Additional access, beyond the free service level, will be priced. The Board anticipates that all Reserve Bank offices will offer priced cash services except for those offices that can demonstrate that operational limitations prevent them from doing so.

The text of the Board's policy statement, effective May 1, 1998, and published in the Federal Register of April 30.

A brief description of the new cash access policy is available for your convenience. The Federal Reserve Banks have begun the process of detailed planning to ensure a smooth transition to the new policy and we will keep you informed in the coming months. In the meantime, please contact Thomas J. Lawler, Assistant Vice President, if you have any questions.

On April 24, 1996, the Board of Governors of the Federal Reserve System approved a new Uniform Cash Access Policy which will introduce greater uniformity in the level of access to cash service across all Federal Reserve Districts. At present there are inconsistencies in cash service access levels among the Federal Reserve Offices. For example, significant variations exist from one Federal Reserve Office to another in both the frequency of cash access afforded depository institutions (from unrestricted access to limited access based on dollar values, volumes, and location) and the number of endpoints served per depository institution. Greater consistency in Federal Reserve policies and service levels will become increasingly important as a greater number of depository institutions have a presence in multiple Federal Reserve Districts.

The new policy was developed with the following framework: 1) the structure of cash services should include a common, base level of free services to achieve greater uniformity in Federal Reserve cash service levels; 2) the base level of free cash services should be consistent with a wholesale role for the Federal Reserve Banks; and 3) Federal Reserve Banks that choose to provide cash services exceeding the base level may do so as a priced service, where demand and need exist.

The new Uniform Cash Access Policy will become effective on May 1, 1998.

The important features of the new policy are listed below.

Number of Endpoints Eligible for Free Cash Access

Frequency of Access

Priced Access

The new policy does not change the standard units for currency orders from deposits to Federal Reserve Banks which are defined in our Operating Circular No. 3, "Currency and Coin." Moreover, the current rules on cross-shipping will continue under the new cash access policy. The new access policy will have provisions to accommodate bank mergers and acquisitions by offering a one-year window for compliance.

Federal Reserve Banks have already begun the process of addressing the operational details of implementing this new policy and will be working closely with depository institutions to ensure a smooth transition on May 1, 1998.

For more policy background information, please refer to the Federal Register docket number R-0922. If you have any questions regarding the new policy, feel free to contact Thomas J. Lawler, Assistant Vice President.

William J. McDonough
President