On April 28, 2020 (85 FR 23445), the Board of Governors of the Federal Reserve System (the “Federal Reserve”) amended Regulation D, Reserve Requirements of Depository Institutions, to delete the numeric limits on certain kinds of transfers and withdrawals that may be made each month from “savings deposits.”

The amendments are intended to allow depository institution customers more convenient access to their funds and to simplify account administration for depository institutions. There are no mandatory changes to deposit reporting associated with the amendments.

Effective date: April 24, 2020.

Background: Section 19 of the Federal Reserve Act (the “Act”) authorizes the Federal Reserve to impose reserve requirements on certain types of deposits and other liabilities of depository institutions solely for the purpose of implementing monetary policy. Specifically, the Act requires each depository institution to maintain reserves against its transaction accounts, non-personal time deposits, and Euro currency liabilities.

Regulation D distinguishes between reservable “transaction accounts” and non-reservable “savings deposits” based on the ease with which the depositor may make transfers (payments to third parties) or withdrawals (payments directly to the depositor) from the account. Prior to this interim final rule, Regulation D limited the number of certain convenient kinds of transfers or withdrawals that an account holder may make from a “savings deposit” to not more than six per month (six transfer limit). Similarly, prior to this interim final rule, Regulation D also imposed requirements on depository institutions for either preventing transfers in excess of six transfer limit or for monitoring such accounts ex post for violations of the limit.

In January 2019, the Federal Open Market Committee announced its intention to implement monetary policy in an ample reserves regime. Reserve requirements do not play a role in this operating framework. In light of the shift to an ample reserves regime, the Federal Reserve announced that, effective March 26, 2020, reserve requirement ratios were reduced to zero percent. This action eliminated reserve requirements for thousands of depository institutions and helped to support lending to households and businesses.

As a result of the elimination of reserve requirements on all transaction accounts, the retention of a regulatory distinction in Regulation D between reservable “transaction accounts” and non- reservable “savings deposits” is no longer necessary. In addition, financial disruptions arising in connection with the Coronavirus situation have caused many depositors to have a more urgent need for access to their funds by remote means, particularly in light of the closure of many depository institution branches and other in-person facilities.

Because of the elimination of reserve requirements and because of financial disruptions related to the Coronavirus (COVID-19), the Federal Reserve amended Regulation D, effective immediately, to delete the six transfer limit from the “savings deposit” definition. This interim final rule includes deletion of the provisions in the “savings deposit” definition that require depository institutions either to prevent transfers and withdrawals in excess of the limit or to monitor savings deposits ex post for violations of the limit. The interim final rule also makes conforming changes to other definitions in Regulation D that refer to “savings deposit” as necessary.

The interim final rule:

• Allows depository institutions immediately to suspend enforcement of the six transfer limit and to allow their customers to make an unlimited number of convenient transfers and withdrawals from their savings deposits.

• Permits, but does not require, depository institutions to suspend enforcement of the six transfer limit.

• Does not require any changes to the deposit reporting practices of depository institutions.

The rule can be found here: https://www.govinfo.gov/ content/pkg/FR-2020-04-28/ pdf/2020-09044.pdf.


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