Circular
Federal Reserve Priced Services
November 29, 2000
Circular No. 11289

Fee Schedules and Private Sector Adjustment Factor for 2001

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

The following is from a press release issued November 8th by the Board of Governors of the Federal Reserve System:

The Federal Reserve Board today approved fee schedules for Federal Reserve Bank payments services, effective January 2, 2001.

Overall, the 2001 price level for Federal Reserve payments services is projected to increase 4.2 percent from the 2000 level. Because of price reductions in recent years, the overall price level has risen only half a percent since 1996.

For electronic payments services, the efficiencies that have been gained from consolidating the Federal Reserve's automated processing facilities will allow the Reserve Banks to maintain their current basic transaction fees for Fedwire funds, book-entry securities, and automated clearinghouse in 2001.

Reflecting, in part, investments in check automation and electronic check technologies, check service fees will increase, on average, approximately 3 percent compared with current prices. These investments should lead to greater operating efficiencies at the Reserve Banks and result in cost savings that ultimately can be passed along to customers.

The 2001 priced services fee schedules are available at the Federal Reserve's Financial Services web site at www.frbservices.org.

The Board today also approved the 2001 private sector adjustment factor (PSAF) for Reserve Bank priced services of $206.9 million, an increase of $14.2 million or 7.4 percent from the 2000 PSAF of $192.6 million.

The PSAF is an allowance for taxes and other imputed expenses that would have been paid and return on capital that would have been provided had the Federal Reserve's priced services been provided by a private business. The Monetary Control Act of 1980 requires the Federal Reserve to recover the costs of providing priced payments services, including the PSAF, over the long run to promote competition between the Reserve Banks and private sector service providers.

The Reserve Banks project that they will recover 98.0 percent of their priced services costs, including operating costs and the imputed costs and target return on equity (ROE), in 2001. The Reserve Banks expect to earn $978.5 million in revenue while incurring operating and imputed costs of $889.4 million, for a net income of $89.1 million compared to a target ROE of $109.3 million. The Reserve Banks estimate that they will recover 100.4 percent of their costs in 2000. During the period 1990 to 1999, the Reserve Banks recovered 99.7 percent of the costs of priced services, including targeted ROE.

The Board's official notice of this action (pdf - 4kb) is available. Questions regarding our priced services may be directed to your account manager (888-596-5471 at the East Rutherford Operations Center; 315-768-2223 at the Utica Office).