[Federal Register Volume 90, Number 224 (Monday, November 24, 2025)]
[Rules and Regulations]
[Pages 52849-52851]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-20744]
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FEDERAL RESERVE SYSTEM
12 CFR Part 204
[Docket No. R-1881; RIN 7100-AH13]
Regulation D: 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 2026. 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 Board is amending Regulation D to set the reserve
requirement exemption amount at $39.2 million (increased from $37.8
million in 2025) and the amount of the low reserve tranche at $674.1
million (increased from $645.8 million in 2025). The adjustments to
both of these amounts are derived using statutory formulas specified in
the Federal Reserve Act (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 24, 2025.
Compliance dates: The new exemption amount and low reserve tranche
will apply beginning January 1, 2026.
FOR FURTHER INFORMATION CONTACT: Benjamin Snodgrass, Special Counsel
(202/263-4877), Legal Division; Kristen Payne, Lead Financial
Institution and Policy Analyst (202/306-9573), 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.
[[Page 52850]]
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
increased by 4.5 percent, from $20,200 billion to $21,118 billion,
between June 30, 2024, and June 30, 2025.\1\ Accordingly, the Board is
amending Regulation D to set the reserve requirement exemption amount
for 2026 at $39.2 million, an increase of $1.4 million from its level
in 2025.\2\
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\1\ The June 30th value for 2024 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 increased
5.5 percent, from $16,133 billion to $17,016 billion, between June 30,
2024, and June 30, 2025.\3\ Accordingly, the Board is amending
Regulation D to set the low reserve tranche for net transaction
accounts for 2026 at $674.1 million, an increase of $28.3 million from
2025.
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\3\ The June 30th value for 2024 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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The new reserve requirement exemption amount and low reserve
tranche will be effective for all depository institutions beginning
January 1, 2026.
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 2026 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 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 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 0 percent of amount.
amount ($39.2 million).
Over reserve requirement exemption 0 percent of amount.
amount ($39.2 million) and up to
low reserve tranche ($674.1
million).
Over low reserve tranche ($674.1 $0 plus 0 percent of amount
million). over $674.1 million.
Nonpersonal time deposits.............. 0 percent.
Eurocurrency liabilities............... 0 percent.
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[[Page 52851]]
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.
Benjamin W. McDonough,
Deputy Secretary of the Board.
[FR Doc. 2025-20744 Filed 11-21-25; 8:45 am]
BILLING CODE 6210-01-P