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Fed issues annual reserve calculation adjustments
WASHINGTON (10/27/10)—The Federal Reserve has announced the annual adjustments to its Regulation D, which sets the reserve and reporting requirements of depository institutions, effective Nov. 26. Regulation D sets the amount depository institutions must maintain 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. The reserve requirements are based on a depository institution’s net transaction accounts, which consist of demand deposits, automatic transfer services accounts, NOW accounts, share draft accounts, telephone or preauthorized transfer accounts, and obligations issued by affiliates maturing in seven days or less. Regulation D also includes periodic reporting requirements that are based on an institution’s level of deposits. Under the Fed adjustments, for net transaction accounts in 2011, the first $10.7 million, unchanged from its level in 2010, will be exempt from reserve requirements. A 3% reserve ratio will be assessed on net transaction accounts over $10.7 million up to and including $58.8 million, up from $55.2 million in 2010. A 10% reserve ratio will be assessed on net transaction accounts in excess of $58.8 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, 2009 and June 30, 2010, according to a Fed release. Use the resource link for more on the Fed changes.
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