Reserve Requirements of Depository Institutions

This section of the FEDERAL REGISTER contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510. The Code of Federal Regulations is sold by the Superintendent of Documents. Rules and Regulations Federal Register 69577 Vol. 86, No. 233 Wednesday, December 8, 2021 1Consistent with Board practice, the low reserve tranche and reserve requirement exemption amounts have been rounded to the nearest $0.1 million. FEDERAL RESERVE SYSTEM 12 CFR Part 204 [Regulation D; Docket No. R–1762] RIN 7100–AG 24 Reserve Requirements of Depository Institutions AGENCY: Board of Governors of the Federal Reserve System. ACTION: Final rule. 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 2022. The annual indexation of these amounts is required notwithstanding the Board’s action in March 2020 setting all reserve requirement ratios to zero. The Regulation D amendments set the reserve requirement exemption amount for 2022 at $32.4 million (increased from $21.1 million in 2021) and the amount of the low reserve tranche at $640.6 million (increased from $182.9 million in 2021). The adjustments to both of these amounts are derived using statutory formulas specified in the Federal Reserve Act (the ‘‘Act’’). The increases in the exemption amount and low reserve tranche for 2022 are larger than in previous years, primarily reflecting the one-time effects of the Regulation D amendments that eliminated the six convenient transfer limit from the definition of a savings deposit and recognized savings deposits as a type of transaction account. The annual indexation of the reserve requirement exemption amount and low reserve tranche, though required by statute, will not affect depository institutions’ reserve requirements, which will remain zero. DATES: Effective January 7, 2022. Compliance dates: The new low reserve tranche and reserve requirement exemption amount will apply beginning January 1, 2022. FOR FURTHER INFORMATION CONTACT: Sophia H. Allison, Senior Special Counsel (202/452–3565), Kristen Payne, Lead Financial Institution and Policy Analyst (202/452–2872), or Francis A. Martinez, Lead Financial Institution and Policy Analyst (202/245–4217), Division of Monetary Affairs; 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 is 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. 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. The Act requires the percentage increase in the reserve requirement exemption amount to be 80 percent of the increase in total reservable liabilities of all depository institutions over the one-year period that ends on the June 30 prior to the adjustment. Total reservable liabilities of all depository institutions increased by 67.0 percent, from $10,901 billion to $18,204 billion, between June 30, 2020, and June 30, 2021. Accordingly, the Board is amending Regulation D to set the reserve requirement exemption amount for 2022 at $32.4 million, an increase of $11.3 million from its level in 2021.1 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 312.8 percent, from $3,866 billion to $15,961 billion, between June 30, 2020, and June 30, 2021. Accordingly, the Board is amending Regulation D to set the low reserve tranche for net transaction accounts for 2022 at $640.6 million, an increase of $457.7 million from 2021. The new reserve requirement exemption amount and low reserve tranche will be effective for all depository institutions beginning January 1, 2022. 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 2022 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 VerDate Sep<11>2014 16:00 Dec 07, 2021 Jkt 256001 PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 E:\FR\FM\08DER1.SGM 08DER1 jspears on DSK121TN23PROD with RULES1

69578 Federal Register / Vol. 86, No. 233 / Wednesday, December 8, 2021 / Rules and Regulations 2 5 U.S.C. 603 and 604. 3 44 U.S.C. 3506; 5 CFR 1320. 1 12 U.S.C. 287. 2 12 CFR 209.4(a). 3 12 U.S.C. 287 and 12 CFR 209.4(c)(2). 4 12 U.S.C. 289(a)(1). 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.2 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. Paperwork Reduction Act In accordance with the Paperwork Reduction Act of 1995,3 the Board reviewed this final rule. No collections of information pursuant to the Paperwork Reduction Act are contained in the final rule. 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 amends 12 CFR part 204 as follows: PART 204—RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS (REGULATION D) ■ 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. ■ 2. Section 204.4 is amended by revising paragraph (f) to read as follows: § 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) Reservable liability Reserve requirement Net Transaction Accounts: $0 to reserve requirement exemption amount ($32.4 million) ............................................ 0 percent of amount. Over reserve requirement exemption amount ($32.4 million) and up to low reserve tranche ($640.6 million). 0 percent of amount. Over low reserve tranche ($640.6 million) .......................................................................... $0 plus 0 percent of amount over $640.6 million. Nonpersonal time deposits .................................................................................................. 0 percent. Eurocurrency liabilities ........................................................................................................ 0 percent. 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, December 3, 2021. Ann E. Misback, Secretary of the Board. [FR Doc. 2021–26568 Filed 12–7–21; 8:45 am] BILLING CODE 6210–01–P FEDERAL RESERVE SYSTEM 12 CFR Part 209 [Regulation I; Docket No. R–1761] RIN 7100–AG 23 Federal Reserve Bank Capital Stock AGENCY: Board of Governors of the Federal Reserve System. ACTION: Final rule. SUMMARY: The Board of Governors (Board) is publishing a final rule that applies an inflation adjustment to the threshold for total consolidated assets in Regulation I. Federal Reserve Bank (Reserve Bank) stockholders that have total consolidated assets above the threshold receive a different dividend rate on their Reserve Bank stock than stockholders with total consolidated assets at or below the threshold. The Federal Reserve Act requires that the Board annually adjust the total consolidated asset threshold to reflect the change in the Gross Domestic Product Price Index, published by the Bureau of Economic Analysis (BEA). Based on the change in the Gross Domestic Product Price Index as of October 28, 2021, the total consolidated asset threshold will be $11,229,000,000 through December 31, 2022. DATES: This final rule is effective January 7, 2022. FOR FURTHER INFORMATION CONTACT: Evan Winerman, Senior Counsel (202– 872–7578), Legal Division; or Rebecca Rider, Senior Financial Institutions Policy Analyst (202–736–1926), Reserve Bank Operations and Payments Systems Division. SUPPLEMENTARY INFORMATION: I. Background Regulation I governs the issuance and cancellation of capital stock by the Reserve Banks. Under section 5 of the Federal Reserve Act 1 and Regulation I,2 a member bank must subscribe to capital stock of the Reserve Bank of its district in an amount equal to six percent of the member bank’s capital and surplus. The member bank must pay for one-half of this subscription on the date that the Reserve Bank approves its application for capital stock, while the remaining half of the subscription shall be subject to call by the Board.3 Section 7(a)(1) of the Federal Reserve Act 4 provides that Reserve Bank stockholders with $10 billion or less in total consolidated assets shall receive a six percent dividend on paid-in capital stock, while stockholders with more than $10 billion in total consolidated assets shall receive a dividend on paid￾in capital stock equal to the lesser of six percent and ‘‘the rate equal to the high yield of the 10-year Treasury note auctioned at the last auction held prior VerDate Sep<11>2014 16:00 Dec 07, 2021 Jkt 256001 PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 E:\FR\FM\08DER1.SGM 08DER1 jspears on DSK121TN23PROD with RULES1