Circular
Regulation D -- Reserve Requirements
April 2, 1998
Circular No. 11042

Switch from Contemporaneous to Lagged System - Effective July 30

To All Depository Institutions in the Second Federal Reserve District:

The following is from a statement by the Board of Governors of the Federal Reserve System:

The Federal Reserve Board has voted to move from a system of contemporaneous reserve requirements to one where reserves are maintained on a lagged basis.

The change will go into effect with the reserve maintenance period beginning July 30, 1998.

The switch will make it easier for depositories to calculate their required reserve balances for the current maintenance period and will increase the accuracy of information on aggregate required reserve balances, which is needed by the Open Market Trading Desk to carry out its operations.

Under the lagged system, the reserve maintenance period for weekly reporting institutions will begin 30 days after the beginning of the two-week reserve computation period. Under the current system, the reserve maintenance period begins only two days after the beginning of the computation period.

A copy of the amendment to Regulation D, Reserve Requirements of Depository Institutions, as published in the Federal Register of March 30 is available as a file (pdf - 33kb). Questions on this matter may be directed to Kenneth P. Lamar, Assistant Vice President, Statistics.