[Federal Register Volume 88, Number 228 (Wednesday, November 29, 2023)]
[Rules and Regulations]
[Pages 83316-83317]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-26212]


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FEDERAL RESERVE SYSTEM

12 CFR Part 204

[Regulation D; Docket No. R-1823]
RIN 7100-AG71


Reserve Requirements of Depository Institutions

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Final rule.

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SUMMARY: The Board is amending Regulation D, Reserve Requirements of 
Depository Institutions, to reflect the annual indexing of the reserve 
requirement exemption amount and the low reserve tranche for 2024. The 
annual indexation of these amounts is required notwithstanding the 
Board's action in March 2020 of setting all reserve requirement ratios 
to zero. The reserve requirement exemption amount for 2023 will remain 
$36.1 million, unchanged for 2024, consistent with the Federal Reserve 
Act (the ``Act''). The Board is amending Regulation D to set the amount 
of the low reserve tranche at $644.0 million (decreased from $691.7 
million in 2023). The adjustment to the low reserve tranche is derived 
using a statutory formula specified in the Act. The annual indexation 
of the reserve requirement exemption amount and low reserve tranche is 
required by statute but will not affect depository institutions' 
reserve requirements, which will remain zero.

DATES: 
    Effective date: December 29, 2023.
    Compliance date: The new low reserve tranche will apply beginning 
January 1, 2024.

FOR FURTHER INFORMATION CONTACT: Benjamin Snodgrass, Senior Counsel 
(202/263-4877), Legal Division; Kristen Payne, Lead Financial 
Institution and Policy Analyst (202/452-2872), Division of Monetary 
Affairs; for users of TTY/TRS, please call 711 from any telephone, 
anywhere in the United States, or (202) 263-4869; Board of Governors of 
the Federal Reserve System, 20th and C Streets NW, Washington, DC 
20551.

SUPPLEMENTARY INFORMATION: Section 19(b)(2) of the Act (12 U.S.C. 
461(b)(2)) requires each depository institution to maintain reserves 
against its transaction accounts and nonpersonal time deposits, as 
prescribed by Board regulations, for the purpose of implementing 
monetary policy. The Board's actions with respect to this provision are 
discussed below.

I. Reserve Requirements

    Section 19(b) of the Act authorizes different ranges of reserve 
requirement ratios depending on the amount of transaction account 
balances at a depository institution. Section 19(b)(11)(A) of the Act 
(12 U.S.C. 461(b)(11)(A)) provides that a zero percent reserve 
requirement ratio shall apply at each depository institution to total 
reservable liabilities that do not exceed a certain amount, known as 
the reserve requirement exemption amount. Section 19(b)(11)(B) provides 
that, before December 31 of each year, the Board shall issue a 
regulation adjusting the reserve requirement exemption amount for the 
next calendar year if total reservable liabilities held at all 
depository institutions increase from one year to the next. The Act 
requires the percentage increase in the reserve requirement exemption 
amount to be 80 percent of the percentage increase in total reservable 
liabilities of all depository institutions over the one-year period 
that ends on the June 30 prior to the adjustment. No adjustment is made 
to the reserve requirement exemption amount if total reservable 
liabilities held at all depository institutions should decrease during 
the applicable time period.
    Total reservable liabilities of all depository institutions 
decreased by 8.6 percent, from $20,841 billion to $19,057 billion, 
between June 30, 2022, and June 30, 2023.\1\ Accordingly, the reserve 
requirement exemption amount for 2024 will remain at $36.1 million, 
unchanged from its level in 2023.\2\
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    \1\ The June 30th value for 2022 may differ from the value used 
in the previous year's calculation because depository institutions 
may revise their deposit data to correct for inaccuracies.
    \2\ Consistent with Board practice, the low reserve tranche and 
reserve requirement exemption amounts have been rounded to the 
nearest $0.1 million.
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    Pursuant to Section 19(b)(2) of the Act (12 U.S.C. 461(b)(2)), 
transaction account balances maintained at each depository institution 
over the reserve requirement exemption amount and up to a certain 
amount, known as the low reserve tranche, may be subject to a reserve 
requirement ratio of not more than 3 percent (and which may be zero). 
Transaction account balances over the low reserve tranche may be 
subject to a reserve requirement ratio of not more than 14 percent (and 
which may be zero). Section 19(b)(2) also provides that, before 
December 31 of each year, the Board shall issue a regulation adjusting 
the low reserve tranche for the next calendar year. The Act requires 
the adjustment in the low reserve tranche to be 80 percent of the 
percentage increase or decrease in total transaction accounts of all 
depository institutions over the one-year period that ends on the June 
30 prior to the adjustment.
    Net transaction accounts of all depository institutions decreased 
8.6 percent, from $17,549 billion to $16,037 billion, between June 30, 
2022, and June 30, 2023.\3\ Accordingly, the Board is amending 
Regulation D to set the low reserve tranche for net transaction 
accounts for 2024 at $644.0 million, a decrease of $47.7 million from 
2023. The new low reserve tranche will be effective for all depository 
institutions beginning January 1, 2024.
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    \3\ The June 30th value for 2022 may differ from the value used 
in the previous year's calculation because depository institutions 
may revise their deposit data to correct for inaccuracies.
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    Effective March 26, 2020, the Board reduced reserve requirement 
ratios on all net transaction accounts to zero percent, eliminating 
reserve requirements for all depository institutions. The annual 
indexation of the reserve requirement exemption amount and the low 
reserve tranche for 2024 is required by statute but will not affect 
depository institutions' reserve requirements, which will remain zero.

II. Regulatory Analysis

Administrative Procedure Act

    The provisions of 5 U.S.C. 553(b) relating to notice of proposed 
rulemaking have not been followed in connection with the adoption of 
these amendments. The amendments involve expected, ministerial 
adjustments prescribed by statute and by the Board's policy concerning 
reporting practices. The adjustments in the reserve requirement 
exemption amount and the low reserve tranche serve to reduce regulatory 
burdens on depository institutions. Accordingly, the Board finds good 
cause for determining, and so

[[Page 83317]]

determines, that notice in accordance with 5 U.S.C. 553(b) is 
unnecessary.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) does not apply to a rulemaking 
where a general notice of proposed rulemaking is not required.\4\ As 
noted previously, the Board has determined that it is unnecessary to 
publish a general notice of proposed rulemaking for this final rule. 
Accordingly, the RFA's requirements relating to an initial and final 
regulatory flexibility analysis do not apply.
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    \4\ 5 U.S.C. 603 and 604.
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Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995,\5\ the 
Board reviewed this final rule. No collections of information pursuant 
to the Paperwork Reduction Act are contained in the final rule.
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    \5\ 44 U.S.C. 3506; 5 CFR part 1320.
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List of Subjects in 12 CFR Part 204

    Banks, Banking, Reporting and recordkeeping requirements.

Authority and Issuance

    For the reasons set forth in the preamble, the Board is amending 12 
CFR part 204 as follows:

PART 204--RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS 
(REGULATION D)

0
1. The authority citation for part 204 continues to read as follows:

    Authority: 12 U.S.C. 248(a), 248(c), 461, 601, 611, and 3105.


0
2. Section 204.4 is amended by revising paragraph (f) to read as 
follows:


 Sec.  204.4  Computation of required reserves.

* * * * *
    (f) For all depository institutions, Edge and Agreement 
corporations, and United States branches and agencies of foreign banks, 
required reserves are computed by applying the reserve requirement 
ratios in table 1 to this paragraph (f) to net transaction accounts, 
nonpersonal time deposits, and Eurocurrency liabilities of the 
institution during the computation period.

                        Table 1 to Paragraph (f)
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            Reservable liability                  Reserve requirement
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Net Transaction Accounts:
    $0 to reserve requirement exemption
     amount ($36.1 million).
    Over reserve requirement exemption        0 percent of amount.
     amount ($36.1 million) and up to low
     reserve tranche ($644.0 million).
    Over low reserve tranche ($644.0          $0 plus 0 percent of
     million).                                 amount over $644.0
                                               million.
    Nonpersonal time deposits...............  0 percent.
    Eurocurrency liabilities................  0 percent.
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    By order of the Board of Governors of the Federal Reserve 
System, acting through the Director of the Division of Monetary 
Affairs under delegated authority.
Ann E. Misback,
Secretary of the Board.
[FR Doc. 2023-26212 Filed 11-28-23; 8:45 am]
BILLING CODE 6210-01-P