Annual adjustments for reserve calculations and deposit reporting.The Federal Reserve Board announced on October October: see month. 4, 2005, the annual indexing of the low reserve tranche Tranche One of several related securities offered at the same time. Tranches from the same offering usually have different risk, reward, and/or maturity characteristics. tranche A class of bonds. and of the reserve requirement exemption amount for 2006. These amounts are used in the calculation of reserve requirements 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. of depository institutions Depository institution A financial institution that obtains its funds mainly through deposits from the public. This includes commercial banks, savings and loan associations, savings banks and credit unions. . The Board also announced the annual indexing of the cutoff level for nonexempt adj. 1. Not exempt; subject to (some specified) rule. Opposite of exempt nt>. 2. (U. S. Labor Law) Not exempt from the provisions of the fair labor practises act; - a term applied mostly to persons who are hourly employees, who are required by law to be deposit and the reduced reporting limit that will be used to determine deposit reporting panels, effective September 2006. All depository institutions must hold a percentage of certain types of deposits as reserves in the form of vault cash Vault cash Cash kept on hand in a depository institution's vault to meet day-to-day business needs, such as cashing checks for customers; can be counted as a portion of the institution's required reserves. , as a deposit in a Federal Reserve Bank, or as a deposit in a pass-through account at a correspondent institution. Reserve requirements currently are assessed on the depository The place where a deposit is placed and kept, e.g., a bank, savings and loan institution, credit union, or trust company. A place where something is deposited or stored as for safekeeping or convenience, e.g., a safety deposit box. institution's net transaction accounts (mostly checking accounts). Depository institutions must also regularly submit reports of their deposits and other reservable liabilities. 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. A 3 percent reserve ratio will be assessed on net transaction accounts more than $7.8 million up to and including $48.3 million (up from $47.6 million in 2005). A 10 percent reserve ratio will be assessed on net transaction accounts in excess of $48.3 million. 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. For depository institutions that report weekly, the low reserve tranche and the reserve requirement exemption amount for 2006 will first apply to the fourteen-day reserve computation Computation is a general term for any type of information processing that can be represented mathematically. This includes phenomena ranging from simple calculations to human thinking. period that began Tuesday, November 22, 2005, and the corresponding fourteen-day reserve maintenance period that begins Thursday, December 22, 2005. For depository institutions that report quarterly, the low reserve tranche and the reserve requirement exemption amount for 2006 will first apply to the seven-day reserve computation period that begins Tuesday, December 20, 2005, and the corresponding seven-day reserve maintenance period that begins Thursday, January 19, 2006. The Board also announced increases in two other amounts, the nonexempt deposit cutoff level and the reduced reporting limit, that are used to determine the frequency with which depository institutions must submit deposit reports. The Federal Register notice containing a description of the new boundaries for deposit reporting that will be effective September 2006 is on the Board's web site at www. federalreserve.gov/boarddocs/press/bcreg/2005/2005 1004/attachment.pdf. |
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