Circular
Annual Adjustments for Calculating Reserve Requirements: Regulation D
October 8, 2004
Circular No. 11648

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

The Federal Reserve Board announced the annual indexing of the low reserve tranche and of the reserve requirement exemption amount for 2005. These amounts are used in the calculation of reserve requirements of depository institutions. The Board also announced the annual indexing of the nonexempt deposit cutoff level and the reduced reporting limit that will be used to determine deposit reporting panels effective September 2005.

All depository institutions must hold a percentage of certain types of deposits as reserves in the form of vault cash, as a deposit in a Federal Reserve Bank, or as a deposit in a pass-through account at a correspondent institution. Reserve requirements currently are assessed on the depository institution's net transaction accounts (mostly checking accounts). Depository institutions must also regularly submit deposit reports of their deposits and other reservable liabilities.

For net transaction accounts in 2005, the first $7.0 million, up from $6.6 million in 2004, will be exempt from reserve requirements. A 3 percent reserve ratio will be assessed on net transaction accounts over $7.0 million up to and including $47.6 million, up from $45.4 million in 2004. A 10 percent reserve ratio will be assessed on net transaction accounts in excess of $47.6 million.

These annual adjustments, known as the low reserve tranche adjustment and the reserve requirement exemption amount adjustment, are based on growth in net transaction accounts and total reservable liabilities, respectively, at all depository institutions between June 30, 2003 and June 30, 2004.

Further details are available in the Board’s press release and notice.

Press release OFFSITE
Board’s notice  PDF

Contact:
Brian Osterhus
Staff Director, Deposit Reports Division
brian.osterhus@ny.frb.org