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Topic: Reserve requirements


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In the News (Wed 17 Jul 19)

  
  Reserve requirements - Wikipedia, the free encyclopedia
Reserve requirements, a tool of monetary policy, are computed as percentages of deposits that banks must hold as vault cash or on deposit at the central bank (in the United States in a Federal Reserve Bank), rather than, perhaps, lend out.
Reserve requirements apply only to transaction accounts, which are components of M1, a narrowly defined measure of money.
Furthermore, the Federal Reserve operates in a way that permits banks to acquire the reserves they need to meet their requirements from the money market, so long as they are willing to pay the prevailing price (the federal funds rate) for borrowed reserves.
en.wikipedia.org /wiki/Reserve_requirements   (487 words)

  
 FRB: Monetary Policy, Reserve Requirements
Reserve requirements are the amount of funds that a depository institution must hold in reserve against specified deposit liabilities.
The dollar amount of a depository institution's reserve requirement is determined by applying the reserve ratios specified in the Federal Reserve Board's Regulation D to an institution's reservable liabilities (see table of reserve requirements).
Required reserves must be held in the form of vault cash and, if vault cash is insufficient, also in the form of a deposit maintained with a Federal Reserve Bank.
www.federalreserve.gov /monetarypolicy/reservereq.htm   (546 words)

  
 Reserve Requirements - Fedpoints - Federal Reserve Bank of New York
Reserve requirements are the portion of deposits that banks may not lend and have to keep either on hand or on deposit at a Federal Reserve Bank
The transactions-account reserve requirement is applied to deposits over a two-week period: a bank's average reserves over the period ending every other Wednesday must equal the required percentage of its average deposits in the two-week period ending the Monday sixteen days earlier.
Reserve requirements impose a cost on the banks equal to the foregone interest on the amount by which required reserves exceed the reserves that banks would voluntarily hold in order to conduct their business, and the Fed has been hesitant to make changes that would increase that cost.
www.ny.frb.org /aboutthefed/fedpoint/fed45.html   (1097 words)

  
 FRB: Press Release--Annual adjustments for reserve calculations and deposit reporting, Regulation D--October 4, 2005   (Site not responding. Last check: 2007-10-14)
Reserve requirements currently are assessed on the depository institution's net transaction accounts (mostly checking accounts).
For reserve requirements in 2006, the first $7.8 million of net transaction accounts (up from $7.0 million in 2005), will be exempt from reserve requirements.
The annual indexing of the low reserve tranche and the reserve requirement exemption amount is based on growth in net transaction accounts and total reservable liabilities, respectively, at all depository institutions between June 30, 2004 and June 30, 2005.
www.federalreserve.gov /boarddocs/press/bcreg/2005/20051004   (405 words)

  
 Are Reserve Requirements Still Binding? - Federal Reserve Bank of New York
The authors then argue that as reserve requirements have become less binding, banks have been able to economize on the vault cash holdings that they use to satisfy a large part of these requirements.
Banks are increasingly relying on vault cash to meet their total reserve requirements, with the result that applied vault cash holdings now represent the far largest share of reserves.
Banks trying to meet reserve requirements, or to shed unexpectedly large excess reserve positions, typically contribute to increased volatility in the federal funds market on the last day of the reserve calculation period.
www.ny.frb.org /research/epr/02v08n1/0205benn/0205benn.html   (1016 words)

  
 Federal Reserve Bulletin: Reserve requirements: history, current practice, and potential reform
Although the Federal Reserve is no longer pursuing this type of short-run control of money, reserve requirements still play an important role in the conduct of open market operations, which are now aimed at influencing general monetary and credit conditions by varying the cost and availability of reserves to the banking system.
The Federal Reserve could resolve this policy dilemma by paying interest on required reserves, or at least on the part of these reserves that banks would not hold were it not for legal requirements.
Most depositories are able to satisfy their entire reserve requirement with vault cash, which they hold primarily to meet the liquidity needs of their customers and would likely hold even in the absence of reserve requirements.
www.findarticles.com /p/articles/mi_m4126/is_n6_v79/ai_14030602   (1199 words)

  
 What effect does a change in the reserve requirement have on the money supply? (08/2001)
Reserve requirements are one of the three monetary policy tools the Federal Reserve uses to implement monetary policy.
For example, with a 10 percent reserve requirement on net transaction accounts, a bank that experiences a net increase of $200 million in these deposits would be required to increase its required reserves by $20 million.
The impact of changes in reserve requirements is difficult to estimate; each change has the potential to affect thousands of depository institutions in different ways, depending on each institution's deposit base.
www.frbsf.org /education/activities/drecon/2001/0108.html   (731 words)

  
 Final Rule: Rule 15c3-3 Reserve Requirements for Margin Related to Security Futures Products; Release No. 34-50295; ...
Without the amendments to Rule15c3-3a, the broker-dealer would be required to fund its customer reserve requirement at least in part with proprietary assets, which would require the broker-dealer to maintain two reserves to cover the same customer property, one reserve in the Reserve Bank Account and the second with the Clearing Organization.
In addition, the amendments require a broker-dealer to obtain from a DCO not otherwise registered with the Commission an executed undertaking in which the DCO agrees to examination by the Commission to monitor the DCO's compliance with the applicable conditions set forth in the amendments to Rule 15c3-3a, Note G, subparagraphs (b)(1) through (3).
Without these changes to Rule15c3-3a, the broker-dealer would be required to fund its customer reserve requirement at least in part with proprietary assets, which would require the broker-dealer to maintain two reserves to cover the same customer property, one reserve in the Reserve Bank Account and the second with the Clearing Organization.
www.sec.gov /rules/final/34-50295.htm   (8288 words)

  
 Proposition 56: State Budget, Related Taxes, Reserve, Voting Requirements, Penalties - California State Government
Requires 25% of certain state revenue increases be deposited in reserve fund, which cannot be used to increase spending.
Reserve funds could only be spent in cases of an emergency or in years in which spending on current service levels exceeded available revenues.
In the event that this measure and another measure or measures relating to the legislative votes required to pass the state budget, increase taxes, or enact or increase fees shall appear on the same statewide election ballot, the provisions of the other measure or measures shall be deemed to be in conflict with this measure.
www.smartvoter.org /2004/03/02/ca/state/prop/56   (4571 words)

  
 Reserve Requirements   (Site not responding. Last check: 2007-10-14)
The article states that a reduction in reserve requirements will make banks more profitable by allowing them to earn interest on previously non interest earning reserves therefore making them more financially sound.
If the U.S. had decided to eliminate the resevere requirement in 92 instead of just lowering it and then congress would have decided to allow the the U.S. to default on it's debt, many banks could have been in serious trouble.
Nevertheless it will be interesting to see the role of the reserve requirement tool in the future.
www2.tltc.ttu.edu /hein/_disc15/00000027.htm   (106 words)

  
 DefenseLINK News: Oft-Absent Reserve Component Members Endanger Education Benefits   (Site not responding. Last check: 2007-10-14)
Reserve component members who enlist, re-enlist or extend in the Selected Reserve for a six-year contract, possess a high school or equivalent diploma and have successfully completed Initial Active Duty for Training are authorized Montgomery GI Bill benefits.
Additionally, active duty members must elect to participate in the program and are required to have their pay reduced by $100 for the first 12 months of their active duty service.
When circumstances that prevent a service member from continuing in the Selected Reserve through no fault of the member's, such as civilian job requirements or relocation, family health issues, a one-year absence from the Selected Reserve may be authorized.
www.defenselink.mil /news/Sep2002/n09172002_200209171.html   (723 words)

  
 Proposed Rule: Rule 15c3-3 Reserve Requirements for Margin Related to Security Futures Products; Release No. 34-46492; ...
Without the proposed changes to Rule15c3-3a, the broker-dealer would be required to fund its customer reserve requirement at least in part with proprietary assets, which would require the broker-dealer to maintain two reserves to cover the same customer property, one reserve in the Reserve Bank Account and the second with the Clearing Agency or DCO.
In addition, the amendments require a broker-dealer to obtain from a DCO not otherwise registered with the Commission an executed undertaking in which the DCO agrees to examination by the Commission to monitor the DCO's compliance with the applicable conditions set forth in the amendments to Rule 15c3-3a.
We preliminarily believe that clarification of the debit treatment of customer SFP margin for Reserve Formula purposes serves as an efficient and cost-effective means for broker-dealers to determine how they will calculate their customer reserve requirements if they clear and carry SFPs in securities accounts for the benefit of customers.
www.sec.gov /rules/proposed/34-46492rev.htm   (5968 words)

  
 GAO Report
War reserves are protected go- to- war assets that are not to be used to improve peacetime readiness or to fill unit shortages.
To meet this requirement, the Army calculates that  it has $1.3 billion in parts prepositioned or otherwise set aside for war reserve,  it has $0.627 billion in on- hand peacetime inventory that could be used to meet its requirement, and  it expects to acquire $0.131 billion in parts from the industrial base.
While the conversion will likely require the acquisition of yet to be determined spare parts for war reserves, the greater commonality should reduce the amount of spare parts required in the long term.
www.globalsecurity.org /military/library/report/gao/gao-01-425.htm   (4611 words)

  
 The Federal Reserve System In Brief: How the Fed Guides Monetary Policy
By law, financial institutions, whether or not they are members of the Federal Reserve System, must set aside a percentage of their deposits as reserves to be held either as cash on hand or as reserve account balances at a Reserve Bank.
Depository institutions use their reserve accounts at Federal Reserve Banks not only to satisfy reserve requirements, but also to process many financial transactions through the Federal Reserve, such as check and electronic payments and currency and coin services.
However, reserve requirements support the implementation of monetary policy by providing a more predictable demand for bank reserves, which increases the Fed's influence over short-term interest rate changes when implementing open market operations.
www.frbsf.org /publications/federalreserve/fedinbrief/guides.html   (550 words)

  
 Federal Reserve Bank of Minneapolis - About the Fed - Reserve Requirements of Depository Institutions - December 31, ...   (Site not responding. Last check: 2007-10-14)
Note: Required reserves must be held in the form of vault cash and, if vault cash is insufficient, also in the form of a deposit with a Federal Reserve Bank.
An institution that is a member of the Federal Reserve System must hold that deposit directly with a Federal Reserve Bank;
an institution that is not a member of the System can maintain that deposit directly with a Reserve Bank or with another institution in a pass-though relationship.
woodrow.mpls.frb.fed.us /info/policy/res-req.cfm   (284 words)

  
 4th Qtr 1996 FRBKC Economic Review   (Site not responding. Last check: 2007-10-14)
Reserve requirements have traditionally been viewed as a key instrument of monetary policy.
First, in the absence of a binding level of reserve requirements, the demand for central bank balances is no longer determined by the public's demand for transactions and term deposits but, instead, depends on depository institutions' need to hold balances for clearing and settlement purposes.
Second, the absence of binding reserve requirements may lead to increased volatility of short-term interest rates and impair the ability of central banks to implement monetary policy.
www.kc.frb.org /publicat/econrev/er96q4.htm   (1073 words)

  
 Journal of Money, Credit & Banking: Federal Reserve System requirements, 1959-1988.@ HighBeam Research   (Site not responding. Last check: 2007-10-14)
Changes in the Federal Reserve System's reserve requirement structure are often complex; consequently judging in the net effect on reserve requirements is difficult.
One measure of aggregate reserve requirement policy effects, the reserve adjustment magnitude, is calculated by the Federal Reserve Bank of St. Louis.
Particular attention is devoted to the complex changes in the reserve requirement structure initiated under the Monetary Control Act of 1980.
www.highbeam.com /library/doc0.asp?DOCID=1G1:7941510&refid=holomed_1   (220 words)

  
 Phoenix Police Department - Phoenix Police Reserve Program (602) 534-9000
Those applicants who wish to be considered for transition from the Reserve Bureau to a career position MUST take a written examination prior to the lateral movement or successfully complete one thousand and forty hours of reserve service as a solo certified officer.
Applicants are required to pass all portions of the physical agility test in order to receive a background packet and continue in the process.
Reserves are initially assigned to work in patrol, in a precinct of their first or second choosing
phoenix.gov /POLICE/phxres1.html   (757 words)

  
 Proposition 56: State Budget, Related Taxes, and Reserve. Voting Requirements. Penalties.
Requires 25 percent of “excess” state revenue (up to 5 percent of General Fund spending) to be set aside.
Reserve funds could be spent only in certain circumstances.
Requires that Legislature and Governor lose salary and expenses each day the budget is late.
www.lao.ca.gov /ballot/2004/56_03_2004.htm   (986 words)

  
 Costly State Monitoring and Reserve Requirements
The paper explores one rationale behind the existence of financial repression, with the latter being represented through the obligatory "high" reserve requirement for the banks.
Using an overlapping generation production-economy-monetary model characterized by the possibility of banking crisis, we try and answer whether at all these high reserve requirements are related to discipline the banks.
The correlation between optimal reserve requirements and probability of crisis is positive only when the social planner has exhausted his ability of income taxation.
ideas.repec.org /p/uct/uconnp/2004-33.html   (1232 words)

  
 Reserve Requirements
Requirements regarding the amount of funds that banks must hold in reserve against deposits made by their customers.
This money must be in the bank's vaults or at the closest Federal Reserve Bank.
Set by the Fed's Board of Governors, reserve requirements are one of the three main tools of monetary policy.
www.investopedia.com /terms/r/requiredreserves.asp   (131 words)

  
 Shaq Helps Phoenix Reserve Bureau!
Just like Shaquille O'Neal of the Los Angeles Lakers, who is a Reserve Deputy with the Los Angeles County Sheriff's Department, you should join the Phoenix Police Department Reserve Bureau and serve your community as a volunteer police officer.
Police Reserve Officers are citizens just like you who attend the police academy.
Once you become a Police Reserve Officer, you volunteer your time to serve and protect your community in uniform patrol or other specialty details, such as detectives.
phoenix.gov /POLICE/shaq.html   (301 words)

  
 Energy Citations Database (ECD) - Energy and Energy-Related Bibliographic Citations   (Site not responding. Last check: 2007-10-14)
These constraints are therefore fuzzy in nature, and crisp treatment of them may lead to over conservative solutions.
In this paper, a fuzzy optimization-based method is developed to solve power system scheduling problem with fuzzy reserve requirements.
Numerical testing results show that near optimal schedules are obtained, and the method can provide a good balance between reducing costs and satisfying reserve requirements.
www.osti.gov /energycitations/product.biblio.jsp?osti_id=264258   (309 words)

  
 American Economist: BACK TO BASICS: RESERVE REQUIREMENTS AND MONEY STOCK CHANGES, 1929-1936.@ HighBeam Research   (Site not responding. Last check: 2007-10-14)
This paper explains how the shift of deposits from nonmember banks and country banks to larger member banks increased the average or "effective" reserve requirement in the 1929-1936 period.
A basic money multiplier model is developed to help clarify the possible impact of increases in effective reserve requirements.
The resulting perspective strengthens the usual charges against the Federal Reserve of...
www.highbeam.com /library/doc0.asp?DOCID=1G1:63298197&refid=holomed_1   (218 words)

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