Release of annual adjustments for reserve calculations and deposit reporting - Announcements

Federal Reserve Bulletin, Nov, 2003

The Federal Reserve Board on October 1, 2003, announced the annual adjustments in the amount of net transaction accounts used in the calculation of reserve requirements and the cutoff level used to determine the detail and frequency of deposit reporting.

All depository institutions must retain a percentage of certain types of deposits in the form of vault cash, or as a deposit in a Federal Reserve Bank, or 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).

For net transaction accounts in 2004, the first $6.6 million, up from $6.0 million in 2003, will be exempt from reserve requirements. A 3 percent reserve ratio will be assessed on net transaction accounts of more than $6.6 million up to and including $45.4 million, up from $42.1 million in 2003. A 10 percent reserve ratio will be applied above $45.4 million.

These annual adjustments, known as the low reserve tranche adjustment and the reservable liabilities exemption adjustment, are based on growth in net transaction accounts and total reservable liabilities, respectively, at all depository institutions between June 30, 2002, and June 30, 2003.

For depository institutions that report weekly, the low reserve tranche adjustment and the reservable liabilities exemption adjustment will apply to the reserve computation period that begins Tuesday, November 25, 2003, and the corresponding reserve maintenance period that begins Thursday, December 25, 2003.

For institutions that report quarterly, the low reserve tranche adjustment and the reservable liabilities exemption adjustment will apply to the reserve computation period that begins Tuesday, December 16, 2003, and the corresponding seven-day reserve maintenance period that begins Thursday, January 15, 2004.

Additionally, the Board increased the deposit cutoff level that is used with the exemption level to determine the frequency and detail of deposit reporting.