Regulation D: Reserve Requirements of Depository Institutions

1 12 U.S.C. 461(b). In March 2020, the Board set all reserve requirement ratios to zero percent. See Interim Final Rule, 85 FR 16525 (Mar. 24, 2020); Final Rule, 86 FR 8853 (Feb. 10, 2021). 2 12 CFR 204.5(a)(1). 3 12 U.S.C. 461(b)(1)(A) and (b)(12)(A). 4See 12 U.S.C. 461(b)(1)(A) & (b)(12)(C); see also 12 CFR 204.2(y). 5See 12 U.S.C. 461(b)(12)(B). 6See 12 CFR 204.10(b)(1). 7 5 U.S.C. 551 et seq. 8 5 U.S.C. 553(b)(3)(A). 9 5 U.S.C. 553(d). FEDERAL RESERVE SYSTEM 12 CFR Part 204 [Docket No. R–1883; RIN 7100–AH16] Regulation D: Reserve Requirements of Depository Institutions AGENCY: Board of Governors of the Federal Reserve System. ACTION: Final rule. SUMMARY: The Board of Governors of the Federal Reserve System (‘‘Board’’) has adopted final amendments to its Regulation D to revise the rate of interest paid on balances (‘‘IORB’’) maintained at Federal Reserve Banks by or on behalf of eligible institutions. The final amendments specify that IORB is
3.65 percent, a 0.25 percentage point
decrease from its prior level. The amendment is intended to enhance the role of IORB in maintaining the federal funds rate in the target range established by the Federal Open Market Committee (‘‘FOMC’’ or ‘‘Committee’’). DATES:
Effective date: This rule is effective December 19, 2025. Applicability date: The IORB rate change was applicable on December 11, 2025. FOR FURTHER INFORMATION CONTACT: M. Benjamin Snodgrass, Special Counsel (202–263–4877), Legal Division, or David Lowe, Financial Institution & Policy Analyst (202–893–6143); for users of telephone systems via text telephone (TTY) or any TTY-based Telecommunications Relay Services, please call 711 from any telephone, anywhere in the United States; Board of Governors of the Federal Reserve System, 20th and C Streets NW, Washington, DC 20551. SUPPLEMENTARY INFORMATION:
I. Statutory and Regulatory Background
For monetary policy purposes, section 19 of the Federal Reserve Act (‘‘Act’’) imposes reserve requirements on certain types of deposits and other liabilities of depository institutions.1 Regulation D, which implements section 19 of the Act, requires that a depository institution meet reserve requirements by holding cash in its vault, or if vault cash is insufficient, by maintaining a balance in an account at a Federal Reserve Bank (‘‘Reserve Bank’’).2 Section 19 also provides that balances maintained by or on behalf of certain institutions in an account at a Reserve Bank may receive earnings to be paid by the Reserve Bank at least once each quarter, at a rate or rates not to exceed the general level of short-term interest rates.3 Institutions that are eligible to receive earnings on their balances held at Reserve Banks (‘‘eligible institutions’’) include depository institutions and certain other institutions.4 Section 19 also provides that the Board may prescribe regulations concerning the payment of earnings on balances at a Reserve Bank.5 Prior to these amendments, Regulation D established IORB at 3.90 percent.6
II. Amendment to IORB
The Board is amending § 204.10(b)(1) of Regulation D to establish IORB at 3.65 percent. The amendment represents a
0.25 percentage point decrease in IORB.
This decision was announced on December 10, 2025, with an effective date of December 11, 2025, in the Federal Reserve Implementation Note that accompanied the FOMC’s statement on December 10, 2025. The FOMC statement stated that the Committee decided to lower the target range for the federal funds rate to 31⁄2 to 33⁄4 percent. The Federal Reserve Implementation Note stated:
The Board of Governors of the Federal Reserve System voted unanimously to lower the interest rate paid on reserve balances to 3.65 percent, effective December 11, 2025. As a result, the Board is amending § 204.10(b)(1) of Regulation D to establish IORB at 3.65 percent.
III. Administrative Procedure Act
In general, the Administrative Procedure Act (‘‘APA’’) 7 imposes three principal requirements when an agency promulgates legislative rules (rules made pursuant to Congressionally￾delegated authority): (1) publication with adequate notice of a proposed rule; (2) followed by a meaningful opportunity for the public to comment on the rule’s content; and (3) publication of the final rule not less than 30 days before its effective date. The APA provides that notice and comment procedures do not apply if the agency for good cause finds them to be ‘‘unnecessary, impracticable, or contrary to the public interest.’’ 8 Section 553(d) of the APA also provides that publication at least 30 days prior to a rule’s effective date is not required for (1) a substantive rule which grants or recognizes an exemption or relieves a restriction; (2) interpretive rules and statements of policy; or (3) a rule for which the agency finds good cause for shortened notice and publishes its reasoning with the rule.9 The Board has determined that good cause exists for finding that the notice, public comment, and delayed effective date provisions of the APA are unnecessary, impracticable, or contrary to the public interest with respect to these final amendments to Regulation D. The rate change for IORB that is reflected in the final amendment to Regulation D was made with a view towards accommodating commerce and business and with regard to their

10 5 U.S.C. 603, 604.
11 44 U.S.C. 3506; see 5 CFR part 1320 Appendix A.1. bearing upon the general credit situation of the country. Notice and public comment would prevent the Board’s action from being effective as promptly as necessary in the public interest and would not otherwise serve any useful purpose. Notice, public comment, and a delayed effective date would create uncertainty about the finality and effectiveness of the Board’s action and undermine the effectiveness of that action. Accordingly, the Board has determined that good cause exists to dispense with the notice, public comment, and delayed effective date procedures of the APA with respect to this final amendment to Regulation D.
IV. Regulatory Flexibility Analysis
The Regulatory Flexibility Act (‘‘RFA’’) does not apply to a rulemaking where a general notice of proposed rulemaking is not required.10 As noted previously, the Board has determined that it is unnecessary and contrary to the public interest 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.
V. Paperwork Reduction Act
In accordance with the Paperwork Reduction Act (‘‘PRA’’) of 1995,11 the Board reviewed the final rule under the authority delegated to the Board by the Office of Management and Budget. The final rule contains no requirements subject to the PRA. 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 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 204.10 is amended by
     revising paragraph (b)(1) to read as follows:
     § 204.10 Payment of interest on balances.

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(b) * * *
(1) For balances maintained in an eligible institution’s master account, interest is the amount equal to the interest on reserve balances rate (‘‘IORB rate’’) on a day multiplied by the total balances maintained on that day. The IORB rate is 3.65 percent.

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By order of the Board of Governors of the Federal Reserve System. Benjamin W. McDonough, Deputy Secretary of the Board. [FR Doc. 2025–23390 Filed 12–18–25; 8:45 am] BILLING CODE 6210–01–P