Regulation D: Reserve Requirements of Depository Institutions, 8220-8221 [2023-02651]

Download as PDF 8220 Federal Register / Vol. 88, No. 26 / Wednesday, February 8, 2023 / Rules and Regulations lotter on DSK11XQN23PROD with RULES1 formula, the secondary credit rate increased by 0.25 percentage points as a result of the Board’s primary credit rate action, thereby increasing the secondary credit rate from 5.00 percent to 5.25 percent. The amendments to Regulation A reflect these rate changes. The 0.25 percentage point increase in the primary credit rate was associated with a 0.25 percentage point increase in the target range for the federal funds rate (from a target range of 41⁄4 percent to 41⁄2 percent to a target range of 41⁄2 percent to 43⁄4 percent) announced by the Federal Open Market Committee on February 1, 2023, as described in the Board’s amendment of its Regulation D published elsewhere in this issue of the Federal Register. Administrative Procedure Act In general, the Administrative Procedure Act (‘‘APA’’) 1 imposes three principal requirements when an agency promulgates legislative rules (rules made pursuant to Congressionallydelegated 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.’’ 2 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.3 The APA further provides that the notice, public comment, and delayed effective date requirements of 5 U.S.C. 553 do not apply ‘‘to the extent that there is involved . . . a matter relating to agency management or personnel or to public property, loans, grants, benefits, or contracts.’’ 4 Regulation A establishes the interest rates that the twelve Reserve Banks charge for extensions of primary credit and secondary credit. The Board has determined that the notice, public comment, and delayed effective date requirements of the APA do not apply to these final amendments to Regulation U.S.C. 551 et seq. U.S.C. 553(b)(3)(A). 3 5 U.S.C. 553(d). 4 5 U.S.C. 553(a)(2) (emphasis added). A. The amendments involve a matter relating to loans and are therefore exempt under the terms of the APA. Furthermore, because delay would undermine the Board’s action in responding to economic data and conditions, the Board has determined that ‘‘good cause’’ exists within the meaning of the APA to dispense with the notice, public comment, and delayed effective date procedures of the APA with respect to the final amendments to Regulation A. Regulatory Flexibility Analysis The Regulatory Flexibility Act (‘‘RFA’’) does not apply to a rulemaking where a general notice of proposed rulemaking is not required.5 As noted previously, a general notice of proposed rulemaking is not required if the final rule involves a matter relating to loans. Furthermore, 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. Paperwork Reduction Act In accordance with the Paperwork Reduction Act (‘‘PRA’’) of 1995,6 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 201 Banks, banking, Federal Reserve System, Reporting and recordkeeping. Authority and Issuance For the reasons set forth in the preamble, the Board is amending 12 CFR Chapter II to read as follows: PART 201 EXTENSIONS OF CREDIT BY FEDERAL RESERVE BANKS (REGULATION A) 1. The authority citation for part 201 continues to read as follows: ■ Authority: 12 U.S.C. 248(i)–(j), 343 et seq., 347a, 347b, 347c, 348 et seq., 357, 374, 374a, and 461. 2. In § 201.51, paragraphs (a) and (b) are revised to read as follows: ■ 15 25 VerDate Sep<11>2014 15:51 Feb 07, 2023 Jkt 259001 55 U.S.C. 603, 604. U.S.C. 3506; see 5 CFR part 1320 Appendix 6 44 A.1. PO 00000 Frm 00014 Fmt 4700 Sfmt 4700 § 201.51 Interest rates applicable to credit extended by a Federal Reserve Bank.3 (a) Primary credit. The interest rate at each Federal Reserve Bank for primary credit provided to depository institutions under § 201.4(a) is 4.75 percent. (b) Secondary credit. The interest rate at each Federal Reserve Bank for secondary credit provided to depository institutions under § 201.4(b) is 5.25 percent. * * * * * By order of the Board of Governors of the Federal Reserve System. Ann E. Misback, Secretary of the Board. [FR Doc. 2023–02650 Filed 2–7–23; 8:45 am] BILLING CODE 6210–02–P FEDERAL RESERVE SYSTEM 12 CFR Part 204 [Docket No. R–1802] RIN 7100–AG55 Regulation D: Reserve Requirements of Depository Institutions Board of Governors of the Federal Reserve System. ACTION: Final rule. AGENCY: 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 4.65 percent, a 0.25 percentage point increase 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: The amendments to part 204 (Regulation D) are effective February 8, 2023. Applicability date: The IORB rate change was applicable on February 2, 2023. SUMMARY: M. Benjamin Snodgrass, Senior Counsel (202–263–4877), Legal Division, or Nicole Trachman, Financial Institution & Policy Analyst (202–973–5055), Division of Monetary Affairs; for users FOR FURTHER INFORMATION CONTACT: 3 The primary, secondary, and seasonal credit rates described in this section apply to both advances and discounts made under the primary, secondary, and seasonal credit programs, respectively. E:\FR\FM\08FER1.SGM 08FER1 Federal Register / Vol. 88, No. 26 / Wednesday, February 8, 2023 / Rules and Regulations of telephone systems via text telephone (TTY) or any TTY-based Telecommunications Relay Services (TRS), 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 4.40 percent.6 II. Amendment to IORB The Board is amending § 204.10(b)(1) of Regulation D to establish IORB at 4.65 percent. The amendment represents a 0.25 percentage point increase in IORB. This decision was announced on February 1, 2023, with an effective date of February 2, 2023, in the Federal Reserve Implementation Note that accompanied the FOMC’s statement on February 1, 2023. The FOMC statement stated that the Committee decided to raise the target range for the federal funds rate to 41⁄2 to 43⁄4 percent. The Federal Reserve Implementation Note stated: lotter on DSK11XQN23PROD with RULES1 The Board of Governors of the Federal Reserve System voted unanimously to raise 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). 4 See 12 U.S.C. 461(b)(1)(A) & (b)(12)(C); see also 12 CFR 204.2(y). 5 See 12 U.S.C. 461(b)(12)(B). 6 See 12 CFR 204.10(b)(1). VerDate Sep<11>2014 15:51 Feb 07, 2023 Jkt 259001 the interest rate paid on reserve balances to 4.65 percent, effective February 2, 2023. As a result, the Board is amending § 204.10(b)(1) of Regulation D to establish IORB at 4.65 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 Congressionallydelegated 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 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. U.S.C. 551 et seq. U.S.C. 553(b)(3)(A). 9 5 U.S.C. 553(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 * * * * (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 4.65 percent. * * * * * By order of the Board of Governors of the Federal Reserve System. Ann E. Misback, Secretary of the Board. [FR Doc. 2023–02651 Filed 2–7–23; 8:45 am] BILLING CODE 6210–01–P 10 5 85 11 44 Frm 00015 Fmt 4700 Payment of interest on balances. * 75 PO 00000 U.S.C. 603, 604. U.S.C. 3506; see 5 CFR part 1320 Appendix A.1. Sfmt 9990 8221 E:\FR\FM\08FER1.SGM 08FER1

Agencies

FEDERAL RESERVE SYSTEM

[Federal Register Volume 88, Number 26 (Wednesday, February 8, 2023)]
[Rules and Regulations]
[Pages 8220-8221]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-02651]


-----------------------------------------------------------------------

FEDERAL RESERVE SYSTEM

12 CFR Part 204

[Docket No. R-1802]
RIN 7100-AG55


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 4.65 percent, a 0.25 percentage point 
increase 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: The amendments to part 204 (Regulation D) are 
effective February 8, 2023.
    Applicability date: The IORB rate change was applicable on February 
2, 2023.

FOR FURTHER INFORMATION CONTACT: M. Benjamin Snodgrass, Senior Counsel 
(202-263-4877), Legal Division, or Nicole Trachman, Financial 
Institution & Policy Analyst (202-973-5055), Division of Monetary 
Affairs; for users

[[Page 8221]]

of telephone systems via text telephone (TTY) or any TTY-based 
Telecommunications Relay Services (TRS), 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 4.40 percent.\6\
---------------------------------------------------------------------------

    \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).
    \4\ See 12 U.S.C. 461(b)(1)(A) & (b)(12)(C); see also 12 CFR 
204.2(y).
    \5\ See 12 U.S.C. 461(b)(12)(B).
    \6\ See 12 CFR 204.10(b)(1).
---------------------------------------------------------------------------

II. Amendment to IORB

    The Board is amending Sec.  204.10(b)(1) of Regulation D to 
establish IORB at 4.65 percent. The amendment represents a 0.25 
percentage point increase in IORB. This decision was announced on 
February 1, 2023, with an effective date of February 2, 2023, in the 
Federal Reserve Implementation Note that accompanied the FOMC's 
statement on February 1, 2023. The FOMC statement stated that the 
Committee decided to raise the target range for the federal funds rate 
to 4\1/2\ to 4\3/4\ percent.
    The Federal Reserve Implementation Note stated:

    The Board of Governors of the Federal Reserve System voted 
unanimously to raise the interest rate paid on reserve balances to 
4.65 percent, effective February 2, 2023.

    As a result, the Board is amending Sec.  204.10(b)(1) of Regulation 
D to establish IORB at 4.65 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\
---------------------------------------------------------------------------

    \7\ 5 U.S.C. 551 et seq.
    \8\ 5 U.S.C. 553(b)(3)(A).
    \9\ 5 U.S.C. 553(d).
---------------------------------------------------------------------------

    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 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.
---------------------------------------------------------------------------

    \10\ 5 U.S.C. 603, 604.
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

    \11\ 44 U.S.C. 3506; see 5 CFR part 1320 Appendix A.1.
---------------------------------------------------------------------------

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)

0
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.


0
2. Section 204.10 is amended by revising paragraph (b)(1) to read as 
follows:


Sec.  204.10  Payment of interest on balances.

* * * * *
    (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 4.65 percent.
* * * * *

    By order of the Board of Governors of the Federal Reserve 
System.
Ann E. Misback,
Secretary of the Board.
[FR Doc. 2023-02651 Filed 2-7-23; 8:45 am]
BILLING CODE 6210-01-P

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.