To All Depository Institutions and Others Concerned
in the Second Federal Reserve District:
The Federal Reserve Board has announced the annual indexing of the low reserve tranche and of the reserve requirement exemption amount for 2007. These amounts are used in the calculation of reserve requirements of depository institutions. The Board also announced the annual indexing of the nonexempt deposit cutoff level and the reduced reporting limit that will be used to determine deposit reporting panels effective 2007.
All depository institutions must hold a percentage of certain types of deposits 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. Reserve requirements currently are assessed on the depository institution's net transaction accounts (mostly checking accounts). Depository institutions must also regularly submit deposit reports of their deposits and other reservable liabilities.
For net transaction accounts in 2007, the first $8.5 million (up from $7.8 million in 2006), will be exempt from reserve requirements. A 3 percent reserve ratio will be assessed on net transaction accounts over $8.5 million up to and including $45.8 million (down from $48.3 million in 2006). A 10 percent reserve ratio will be assessed on net transaction accounts in excess of $45.8 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, 2005 and June 30, 2006.
See the press release and the Board’s notice for full details.