82 FR 28757 - Regulation D: Reserve Requirements of Depository Institutions

FEDERAL RESERVE SYSTEM

Federal Register Volume 82, Issue 121 (June 26, 2017)

Page Range		28757-28758
FR Document		2017-13107

The Board of Governors of the Federal Reserve System (``Board'') is amending Regulation D (Reserve Requirements of Depository Institutions) to revise the rate of interest paid on balances maintained to satisfy reserve balance requirements (``IORR'') and the rate of interest paid on excess balances (``IOER'') maintained at Federal Reserve Banks by or on behalf of eligible institutions. The final amendments specify that IORR is 1.25 percent and IOER is 1.25 percent, a 0.25 percentage point increase from their prior levels. The amendments are intended to enhance the role of such rates of interest in moving the Federal funds rate into the target range established by the Federal Open Market Committee (``FOMC'' or ``Committee'').

Federal Register, Volume 82 Issue 121 (Monday, June 26, 2017)

[Federal Register Volume 82, Number 121 (Monday, June 26, 2017)]
[Rules and Regulations]
[Pages 28757-28758]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-13107]



[[Page 28757]]

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FEDERAL RESERVE SYSTEM

12 CFR Part 204

[Docket No. R-1566; RIN 7100 AE-80]


Regulation D: Reserve Requirements of Depository Institutions

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Final rule.

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SUMMARY: The Board of Governors of the Federal Reserve System 
(``Board'') is amending Regulation D (Reserve Requirements of 
Depository Institutions) to revise the rate of interest paid on 
balances maintained to satisfy reserve balance requirements (``IORR'') 
and the rate of interest paid on excess balances (``IOER'') maintained 
at Federal Reserve Banks by or on behalf of eligible institutions. The 
final amendments specify that IORR is 1.25 percent and IOER is 1.25 
percent, a 0.25 percentage point increase from their prior levels. The 
amendments are intended to enhance the role of such rates of interest 
in moving the Federal funds rate into the target range established by 
the Federal Open Market Committee (``FOMC'' or ``Committee'').

DATES: This rule is effective June 26, 2017. The IORR and IOER rate 
changes were applicable on June 15, 2017.

FOR FURTHER INFORMATION CONTACT: Clinton Chen, Attorney (202-452-3952), 
or Sophia Allison, Special Counsel (202-452-3198), Legal Division, or 
Thomas Keating, Financial Analyst (202-973-7401), or Laura Lipscomb, 
Section Chief (202-973-7964), Division of Monetary Affairs; for users 
of Telecommunications Device for the Deaf (TDD) only, contact 202-263-
4869; 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 
(``the Act'') imposes reserve requirements on certain types of deposits 
and other liabilities of depository institutions. 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'').\1\ 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. 
Institutions that are eligible to receive earnings on their balances 
held at Reserve Banks (``eligible institutions'') include depository 
institutions and certain other institutions.\2\ Section 19 also 
provides that the Board may prescribe regulations concerning the 
payment of earnings on balances at a Reserve Bank.\3\ Prior to these 
amendments, Regulation D specified a rate of 1.00 percent for both IORR 
and IOER.\4\
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    \1\ 12 CFR 204.5(a)(1).
    \2\ Section 19(b)(1)(A) defines ``depository institution'' as 
any insured bank as defined in section 3 of the Federal Deposit 
Insurance Act or any bank which is eligible to make application to 
become an insured bank under section 5 of such Act; any mutual 
savings bank as defined in section 3 of the Federal Deposit 
Insurance Act or any bank which is eligible to make application to 
become an insured bank under section 5 of such Act; any savings bank 
as defined in section 3 of the Federal Deposit Insurance Act or any 
bank which is eligible to make application to become an insured bank 
under section 5 of such Act; any insured credit union as defined in 
section 101 of the Federal Credit Union Act or any credit union 
which is eligible to make application to become an insured credit 
union pursuant to section 201 of such Act; any member as defined in 
section 2 of the Federal Home Loan Bank Act; [and] any savings 
association (as defined in section 3 of the Federal Deposit 
Insurance Act) which is an insured depository institution (as 
defined in such Act) or is eligible to apply to become an insured 
depository institution under the Federal Deposit Insurance Act. See 
12 U.S.C. 461(b)(1)(A). Eligible institution also includes any trust 
company, corporation organized under section 25A or having an 
agreement with the Board under section 25, or any branch or agency 
of a foreign bank (as defined in section 1(b) of the International 
Banking Act of 1978). 12 U.S.C. 461(b)(12)(C); see 12 CFR 204.2(y) 
(definition of ``eligible institution'').
    \3\ See 12 U.S.C. 461(b)(12).
    \4\ See 12 CFR 204.10(b)(5).
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II. Amendments to IORR and IOER

    The Board is amending Sec.  204.10(b)(5) of Regulation D to specify 
that IORR is 1.25 percent and IOER is 1.25 percent. This 0.25 
percentage point increase in the IORR and IOER was associated with an 
increase in the target range for the federal funds rate, from a target 
range of \3/4\ to 1 percent to a target range of 1 to 1\1/4\ percent, 
announced by the FOMC on June 14, 2017, with an effective date of June 
15, 2017. The FOMC's press release on the same day as the announcement 
noted that:

    Information received since the Federal Open Market Committee met 
in May indicates that the labor market has continued to strengthen 
and that economic activity has been rising moderately so far this 
year. Job gains have moderated but have been solid, on average, 
since the beginning of the year, and the unemployment rate has 
declined. Household spending has picked up in recent months, and 
business fixed investment has continued to expand. On a 12-month 
basis, inflation has declined recently and, like the measure 
excluding food and energy prices, is running somewhat below 2 
percent. Market-based measures of inflation compensation remain low; 
survey-based measures of longer-term inflation expectations are 
little changed, on balance.
    Consistent with its statutory mandate, the Committee seeks to 
foster maximum employment and price stability. The Committee 
continues to expect that, with gradual adjustments in the stance of 
monetary policy, economic activity will expand at a moderate pace, 
and labor market conditions will strengthen somewhat further. 
Inflation on a 12-month basis is expected to remain somewhat below 2 
percent in the near term but to stabilize around the Committee's 2 
percent objective over the medium term. Near term risks to the 
economic outlook appear roughly balanced, but the Committee is 
monitoring inflation developments closely.
    In view of realized and expected labor market conditions and 
inflation, the Committee decided to raise the target range for the 
federal funds rate to 1 to 1\1/4\ percent. The stance of monetary 
policy remains accommodative, thereby supporting some further 
strengthening in labor market conditions and a sustained return to 2 
percent inflation.

    A Federal Reserve Implementation note released simultaneously with 
the announcement stated that:

    The Board of Governors of the Federal Reserve System voted 
unanimously to raise the interest rate paid on required and excess 
reserve balances to 1.25 percent, effective June 15, 2017.

    As a result, the Board is amending Sec.  204.10(b)(5) of Regulation 
D to change IORR to 1.25 percent and IOER to 1.25 percent.

III. Administrative Procedure Act

    In general, the Administrative Procedure Act (12 U.S.C. 551 et 
seq.) (``APA'') 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.'' 12 U.S.C. 553(b)(3)(A). Section 553(d) of the APA 
also provides that publication not less than 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) an agency finding good

[[Page 28758]]

cause for shortened notice and publishing its reasoning with the rule. 
12 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 the final amendments to Regulation D. The rate 
increases for IORR and IOER that are reflected in the final amendments 
to Regulation D were 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 the final amendments 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.\5\ 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.
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    \5\ 5 U.S.C. 603 and 604.
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V. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act (``PRA'') of 1995 
(44 U.S.C. 3506; 5 CFR part 1320, appendix A.1), 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.

    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)(5) to read as 
follows:


Sec.  204.10   Payment of interest on balances.

* * * * *
    (b) * * *
    (5) The rates for IORR and IOER are:

------------------------------------------------------------------------
                                                               Rate  (%)
------------------------------------------------------------------------
IORR.........................................................       1.25
IOER.........................................................       1.25
------------------------------------------------------------------------

* * * * *

    By order of the Board of Governors of the Federal Reserve 
System, June 19, 2017.
Ann E. Misback,
Secretary of the Board.
[FR Doc. 2017-13107 Filed 6-23-17; 8:45 am]
BILLING CODE 6210-01-P

28758 Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Rules and Regulations

cause for shortened notice and PART 204—RESERVE DATES: This AD is effective July 31,
publishing its reasoning with the rule. REQUIREMENTS OF DEPOSITORY 2017.
12 U.S.C. 553(d). INSTITUTIONS (REGULATION D) The Director of the Federal Register
approved the incorporation by reference
The Board has determined that good
■ 1. The authority citation for part 204 of a certain publication listed in this AD
cause exists for finding that the notice,
continues to read as follows: as of July 31, 2017.
public comment, and delayed effective
Authority: 12 U.S.C. 248(a), 248(c), 461, ADDRESSES: You may examine the AD
date provisions of the APA are
601, 611, and 3105. docket on the Internet at http://
unnecessary, impracticable, or contrary
www.regulations.gov by searching for
to the public interest with respect to the ■ 2. Section 204.10 is amended by
and locating Docket No. FAA–2017–
final amendments to Regulation D. The revising paragraph (b)(5) to read as
0343; or in person at Document
rate increases for IORR and IOER that follows:
Management Facility, U.S. Department
are reflected in the final amendments to of Transportation, Docket Operations,
§ 204.10 Payment of interest on balances.
Regulation D were made with a view M–30, West Building Ground Floor,
towards accommodating commerce and * * * * *
(b) * * * Room W12–140, 1200 New Jersey
business and with regard to their Avenue SE., Washington, DC 20590.
bearing upon the general credit situation (5) The rates for IORR and IOER are:
For service information identified in
of the country. Notice and public Rate this AD, contact DG Flugzeugbau
comment would prevent the Board’s (%) GmbH, Otto-Lilienthal Weg 2, D–76646
action from being effective as promptly Bruchsal, Germany; telephone: +49
as necessary in the public interest, and IORR ............................................. 1.25 (0)7251 3202–0; email: info@dg-
would not otherwise serve any useful IOER ............................................. 1.25 flugzeugbau.de; Internet: http://www.dg-
purpose. Notice, public comment, and a flugzeugbau.de/en/?noredirect=en_US.
delayed effective date would create * * * * * You may view this referenced service
uncertainty about the finality and By order of the Board of Governors of the information at the FAA, Small Airplane
effectiveness of the Board’s action and Federal Reserve System, June 19, 2017. Directorate, 901 Locust, Kansas City,
undermine the effectiveness of that Ann E. Misback, Missouri 64106. For information on the
action. Accordingly, the Board has Secretary of the Board. availability of this material at the FAA,
determined that good cause exists to [FR Doc. 2017–13107 Filed 6–23–17; 8:45 am] call (816) 329–4148. It is also available
dispense with the notice, public BILLING CODE 6210–01–P on the Internet at http://
comment, and delayed effective date www.regulations.gov by searching for
procedures of the APA with respect to Docket No. FAA–2017–0343.
the final amendments to Regulation D. FOR FURTHER INFORMATION CONTACT: Jim
DEPARTMENT OF TRANSPORTATION Rutherford, Aerospace Engineer, FAA,
IV. Regulatory Flexibility Analysis Small Airplane Directorate, 901 Locust,
Federal Aviation Administration
The Regulatory Flexibility Act Room 301, Kansas City, Missouri 64106;
14 CFR Part 39 telephone: (816) 329–4165; fax: (816)
(‘‘RFA’’) does not apply to a rulemaking
329–4090; email:
where a general notice of proposed
[Docket No. FAA–2017–0343; Directorate jim.rutherford@faa.gov.
rulemaking is not required.5 As noted
Identifier 2017–CE–005–AD; Amendment SUPPLEMENTARY INFORMATION:
previously, the Board has determined 39–18936; AD 2017–13–06]
that it is unnecessary and contrary to Discussion
the public interest to publish a general RIN 2120–AA64 We issued a notice of proposed
notice of proposed rulemaking for this
Airworthiness Directives; DG rulemaking (NPRM) to amend 14 CFR
final rule. Accordingly, the RFA’s
Flugzeugbau GmbH Gliders part 39 by adding an AD that would
requirements relating to an initial and
apply to all DG Flugzeugbau GmbH
final regulatory flexibility analysis do Models DG–400, DG–500M, DG–500MB,
AGENCY: Federal Aviation
not apply. DG–800A, and DG–800B gliders. The
Administration (FAA), Department of
V. Paperwork Reduction Act Transportation (DOT). NPRM was published in the Federal
ACTION: Final rule. Register on April 21, 2017 (82 FR
In accordance with the Paperwork 18722). The NPRM proposed to correct
Reduction Act (‘‘PRA’’) of 1995 (44 SUMMARY: We are adopting a new an unsafe condition for the specified
U.S.C. 3506; 5 CFR part 1320, appendix airworthiness directive (AD) for all DG products and was based on mandatory
A.1), the Board reviewed the final rule Flugzeugbau GmbH Models DG–400, continuing airworthiness information
under the authority delegated to the DG–500M, DG–500MB, DG–800A, and (MCAI) originated by an aviation
Board by the Office of Management and DG–800B gliders. This AD results from authority of another country.
Budget. The final rule contains no mandatory continuing airworthiness The MCAI states:
requirements subject to the PRA. information (MCAI) issued by an During service and annual inspection, DG
aviation authority of another country to found that some fuel hoses with textile fabric
List of Subjects in 12 CFR Part 204 identify and correct an unsafe condition covering, installed from the beginning of the
on an aviation product. The MCAI year 2015, had become weak or untight with
Banks, Banking, Reporting and
sradovich on DSK3GMQ082PROD with RULES

describes the unsafe condition as a time. The suspected root cause for this
recordkeeping requirements. premature degradation is a manufacturing
manufacturing defect in certain textile
For the reasons set forth in the defect of a certain batch of fuel hoses.
fabric covered fuel hoses, which could
This condition, if not detected and
preamble, the Board amends 12 CFR cause the fuel hose to fail. We are corrected, may lead to kinking of the fuel
part 204 as follows: issuing this AD to require actions to hoses, possibly resulting in a reduced fuel
address the unsafe condition on these supply and consequent partial or total loss of
55 U.S.C. 603 and 604. products. available power.

VerDate Sep<11>2014 16:07 Jun 23, 2017 Jkt 241001 PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 E:\FR\FM\26JNR1.SGM 26JNR1

Document Created: 2018-11-14 10:11:00
Document Modified: 2018-11-14 10:11:00

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Rules and Regulations
Action		Final rule.
Dates		This rule is effective June 26, 2017. The IORR and IOER rate changes were applicable on June 15, 2017.
Contact		Clinton Chen, Attorney (202-452-3952), or Sophia Allison, Special Counsel (202-452-3198), Legal Division, or Thomas Keating, Financial Analyst (202-973-7401), or Laura Lipscomb, Section Chief (202-973-7964), Division of Monetary Affairs; for users of Telecommunications Device for the Deaf (TDD) only, contact 202-263- 4869; Board of Governors of the Federal Reserve System, 20th and C Streets NW., Washington, DC 20551.
FR Citation		82 FR 28757
CFR Associated		Banks; Banking and Reporting and Recordkeeping Requirements