Reserves Calculation
Reserve Requirements
Reserve requirements are calculated on the basis of the Report of Transaction Accounts, Other Deposits, and Vault Cash (FR 2900) and, if applicable to the reporting institution, the Report of Certain Eurocurrency Transactions (FR 2950/2951).
A reserve requirement is the amount determined by applying the reserve ratios specified in Regulation D to an institution's reservable liabilities (comprised of net transaction accounts, nonpersonal time deposits, and Eurocurrency liabilities) during the relevant computation period. The institution must satisfy its reserve requirement in the form of vault cash or balances maintained either directly with a Reserve Bank or in a pass-through account relationship with a correspondent. The portion of the reserve requirement that is not satisfied by vault cash holdings is called the reserve balance requirement.
The Reserves Maintenance Manual sets out the fundamental rules of reserve calculation and account maintenance for institutions that file FR 2900, either weekly or quarterly. The manual reflects the adoption of a single master account structure and the return to lagged reserve maintenance for weekly FR 2900 reporters.
Deficiency Charges
If a depository institution has both reserve balance and clearing balance requirements, the institution's average end-of-day account balance for the reserve maintenance period applies first to satisfy its reserve balance requirement, after which the remainder is used to satisfy the clearing balance requirement. Thus, an institution can be deficient either in its clearing balance requirement or in both its clearing balance and reserve balance requirements. In any given maintenance period, if an institution fails to maintain an average end-of-day balance over the reserve maintenance period adequate to meet its total balance requirement (after the application of as of adjustments, carry-over, and the clearing balance allowance), the institution may be subject to a monetary charge or, in rare instances, may be required to compensate for the deficiency in a future period.
The amount of the charge for a reserve balance deficiency is calculated at two percent per year above the Discount Rate effective on the first day of the calendar month in which the deficiency occurs. Charges are assessed on the basis of daily average deficiencies during each maintenance period. In determining whether to assess a charge for a reserve balance deficiency, the Reserve Bank will consider the circumstances of the specific deficiency and the reserve maintenance history of the institution incurring it. References can be found in Section 204.7, Regulation D, Penalties.
