[Federal Register Volume 63, Number 46 (Tuesday, March 10, 1998)]
[Notices]
[Pages 11683-11684]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-6137]


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FEDERAL RESERVE SYSTEM

[Docket No. R-0922]


Federal Reserve Uniform Cash Access Policy

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Policy statement.

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SUMMARY: The Board has revised its cash access policy to clarify the 
base level of free currency access to all depository institutions in an 
interstate branching environment. Each depository institution will be 
able to designate up to ten endpoints to receive free currency access 
from each Reserve Bank office. The revised policy provides flexibility 
to depository institutions to make the most cost-effective arrangements 
for obtaining cash services from Reserve Bank offices. The Board has 
also delegated authority to the director of the Division of Reserve 
Bank Operations and Payment Systems to interpret the cash access 
policy.

EFFECTIVE DATE: May 4, 1998.

FOR FURTHER INFORMATION CONTACT: Jon J. Cameron, Manager (202/452-2220) 
or Kathleen M. Connor, Senior Financial Services Analyst (202/452-
3917), Cash Section, Division of Reserve Bank Operations and Payment 
Systems; for the hearing impaired only: Telecommunications Device for 
the Deaf, Diane Jenkins (202/452-3544).

SUPPLEMENTARY INFORMATION:

I. Background

    In April 1996, the Board approved a new cash access policy that 
becomes effective on May 4, 1998 (61 FR 19062, April 30, 1996). The 
policy provides greater consistency in Reserve Bank cash service levels 
than currently exists. 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. Depository 
institution offices that meet minimum volume thresholds will be able to 
obtain more frequent free access. Fees will be charged for additional 
access beyond the free service level. The policy applies only to 
currency deposits and orders, and does not include coin deposits and 
orders.
    Since approval of the policy, issues have arisen regarding 
implementation in an interstate branching environment. The issues 
relate to the definition of endpoints eligible for free access. The 
April 1996 policy allowed each depository institution with a banking 
presence in a Federal Reserve office territory to designate up to ten 
offices to receive free cash access (deposit and order) from the local 
Reserve Bank office (i.e., the Reserve Bank office in whose territory 
the institution's office is located). Depository institutions asked 
Reserve Bank offices whether they could receive cash services from non-
local Reserve Bank offices. It may be more economical for some 
depository institutions to use a non-local Reserve Bank office. For 
example, some depository institutions serve as correspondent banks for 
respondent banks in other Federal Reserve territories. There also are 
depository institutions that are geographically closer to non-local 
Reserve Bank offices. In addition, depository institutions asked if an 
automated teller machine (ATM) network or subset of a network could be 
designated as an office to receive free cash access.
    In order to address these issues, the Board has revised the April 
1996 policy.

II. Discussion

    The Board has revised its cash access policy within the following 
framework: (1) the policy continues to provide consistency in the cash 
service levels provided by Reserve Bank offices to depository 
institutions; (2) the base level of free cash services continues to be 
consistent with a wholesale role for the Reserve Banks, which implies 
that a large depository institution is responsible for servicing its 
own branch network; and (3) the policy provides flexibility to 
depository institutions to make the most cost-effective arrangements 
for obtaining cash services from Reserve Bank offices.
    Under the revised policy, each depository institution can designate 
up to ten endpoints to receive free cash access service from each 
Reserve Bank office. A depository institution may not designate an 
endpoint to receive free cash access from more than one Reserve Bank 
office. A designated endpoint may be a branch, head office, a money 
room and/or an armored carrier used by the depository institution to 
provide cash. Individual ATM locations are not eligible for designation 
as endpoints. If a depository institution uses an armored carrier to 
service ATMs, the armored carrier may be designated as an endpoint. 
Beyond the ten endpoints, Reserve Bank offices will continue to provide 
free cash access to large endpoints whose volumes exceed a specified 
threshold.
    The revised policy provides flexibility to depository institutions 
to make the most cost-effective arrangements for obtaining cash 
services from Reserve Bank offices. For some depository institutions, 
it may be more economical to use a non-local Reserve Bank office.
    The Board continues to believe that implementation of the policy 
will not materially affect the Reserve Banks' costs of providing cash 
services. Aggregate cash receipts and disbursements are expected to 
remain unchanged.
    The Board has delegated authority to the director of the Division 
of Reserve Bank Operations and Payment Systems to interpret the cash 
access policy, and has permitted the director to further delegate this 
authority to the Reserve Banks' Financial Services Policy Committee. 
Other aspects of the policy remain unchanged.

III. Effective Date

    The revised cash access policy becomes effective on May 4, 1998.

IV. Competitive Impact Analysis

    The Board assesses the competitive impact of changes that may have 
a substantial effect on payment system participants. In particular, the 
Board assesses whether a proposed change would have a direct and 
material adverse effect on the ability of other service providers to 
compete effectively with the Federal Reserve Banks in providing similar 
services and whether such effects are due to legal differences or due 
to a dominant market position deriving from such legal differences.
    It is highly unlikely that the revised policy will result in any 
significant shift to Federal Reserve cash services away from private-
sector providers. Private-

[[Page 11684]]

 sector providers offer an array of value-added cash services that the 
Federal Reserve Bank offices do not provide. The revised policy also 
clarifies that armored carriers may be designated as endpoints. The 
Board's revised policy, therefore, does not adversely affect the 
ability of depository institutions or service providers to compete with 
the Federal Reserve Banks to provide cash services.

V. Federal Reserve Cash Service Access Policy

    The Board has adopted the following Federal Reserve cash access 
policy:
    1. Number of endpoints eligible for free cash access. Each 
depository institution can designate up to ten endpoints to receive 
free cash access (deposit and order) service from each Reserve Bank 
office. A depository institution may not designate an endpoint to 
receive free cash access from more than one Reserve Bank office. A 
designated endpoint may be a branch, head office, a money room and/or 
an armored carrier used by the depository institution to provide cash 
services. Individual ATM locations are not eligible for designation as 
endpoints. If a depository institution uses an armored carrier to 
service ATMs, the armored carrier may be designated as an endpoint.
    Beyond the ten endpoints, Reserve Bank offices will provide free 
cash access to endpoints whose volumes exceed a specified threshold. 
Each Reserve Bank office will set a ``high bundle threshold,'' within 
the range of fifty to one hundred bundles, to accommodate the needs of 
the geographic area being serviced within that Federal Reserve office 
territory. If a depository institution receives free access for more 
than ten endpoints, each endpoint must meet the high bundle threshold.
    2. Frequency of access. Normal free access for each designated 
endpoint of the depository institution will be one deposit and one 
order per week. Access more frequent than once per week will be 
available free of charge to each designated endpoint whose volume 
exceeds a twenty-bundle aggregate threshold and that satisfies the 
local Reserve Bank office's denomination bundle standard.
    3. Priced access. Reserve Bank offices may choose to accommodate 
additional access where the demand exists subject to the constraints of 
the physical facilities at each Reserve Bank office. Reserve Banks must 
price access to cash services beyond the free service described above, 
if offered.
    4. Delegation of authority. The director of the Division of Reserve 
Bank Operations and Payment Systems, under delegated authority, may (1) 
approve changes in the base number of free endpoints and the volume 
thresholds; (2) waive the policy for a limited period if warranted by 
special circumstances, such as a natural disaster or the introduction 
of new currency; and (3) interpret the cash access policy. The director 
may further delegate this authority to interpret the policy to the 
Federal Reserve Banks' Financial Services Policy Committee.

    By order of the Board of Governors of the Federal Reserve 
System, March 5, 1998.
William W. Wiles,
Secretary of the Board.
[FR Doc. 98-6137 Filed 3-9-98; 8:45 am]
BILLING CODE 6210-01-P