Circular
Annual Adjustments for Calculating Reserve Requirements: Regulation D
October 5, 2005
Circular No. 11738

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 2006. 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 2006.

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 reports of their deposits and other reservable liabilities.

For reserve requirements in 2006, the first $7.8 million of net transaction accounts (up from $7.0 million in 2005), will be exempt from reserve requirements. A 3 percent reserve ratio will be assessed on net transaction accounts over $7.8 million up to and including $48.3 million (up from $47.6 million in 2005). A 10 percent reserve ratio will be assessed on net transaction accounts in excess of $48.3 million.

The annual indexing of the low reserve tranche and the reserve requirement exemption amount is based on growth in net transaction accounts and total reservable liabilities, respectively, at all depository institutions between June 30, 2004 and June 30, 2005.

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

Board’s press release OFFSITE
Board’s notice OFFSITE PDF

Contacts:
Brian Osterhus
Staff Director
Statistics Function
brian.osterhus@ny.frb.org
(212) 720-8023


Kenneth Lamar
Vice President
Statistics Function