The Federal Reserve today proposed changes to Regulation D, which addresses reserve requirements of depository institutions. The proposal would eliminate references to an “interest on required reserves” rate and to an “interest on excess reserves rate.” The Fed would replace these with a reference to a single “interest on reserve balances” rate.
In addition, the Fed also proposed to simplify the formula used to calculate the amount of interest paid on balances maintained by or on behalf of eligible institutions in master accounts at Federal Reserve Banks, among other things. Comments on the proposal are due 60 days after publication in the Federal Register.
Finally, the Fed adopted as a final rule a previously issued interim final rule lowering reserve requirement ratios on transaction accounts maintained at depository institutions to zero percent. The rule takes effect upon publication in the Federal Register.