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Fed Delays Implementation of Second Phase of Program to Simplify Administration of Reserve Requirements

 

Oct 29 - The Federal Reserve Board has announced a five-month delay in the implementation of the second phase of its program to simplify the administration of reserve requirements. The delay will allow for further development and testing of automated systems to ensure a smooth transition for affected institutions.

The board issued a final rule on April 4, 2012, amending its Regulation D to simplify the reserve administration program in two phases. The first phase, which took effect on July 12, 2012, discontinued as-of adjustments related to deposit report revisions and eliminated clearing balance requirements.

The second phase of the amendments will introduce a common two-week maintenance period and a penalty-free band around reserve balance requirements to eliminate carryover and routine penalty waivers. The second phase of amendments was originally scheduled to take effect on Jan. 24, 2013.  The new effective date is June 27, 2013.

The purpose of the simplification is to reduce administrative and operational costs for depository institutions, the Federal Reserve Board and Federal Reserve Banks. The project does not affect the stance of monetary policy.

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