Reserves Central—Reserve Account Administration Application Frequently Asked Questions

If your question is not answered by the information provided within these frequently asked questions or the Reserves Central page, please contact your Reserves Central District Contact or the Federal Reserve's Customer Contact Center.

Reserves Administration

1. What is a reserve balance requirement?

   A reserve balance requirement is the portion of an institution’s reserve requirement that is not satisfied by its vault cash and therefore must be maintained either directly with a Reserve Bank or in a pass-through arrangement.

2. What is a maintenance period?

   A maintenance period consists of 14 consecutive days beginning on a Thursday and ending on the second Wednesday.

3. When can I access my institution’s reserve balance requirement?

   Information on your institution’s reserve balance requirement is available during and after the reserve balance requirement calculation period. Calendars illustrating the relationship between FR 2900 reporting (computation periods), reserve balance requirement periods, and maintenance periods are available for weekly FR 2900 reporters (PDF) and quarterly FR 2900 reporters (PDF).

4. Where can I find information on the relationship between reporting periods and maintenance periods?

   Information on the relationship between reporting periods and maintenance periods are illustrated in the Reserve Maintenance Calendars for 2900 weekly (PDF) and FR 2900 quarterly (PDF) reporters.

5. What is a penalty-free band?

   A penalty-free band is a range on both sides of the reserve balance requirement within which an institution needs to maintain its average balance over the maintenance period in order to satisfy its reserve balance requirement. The top of the penalty-free band is equal to the reserve balance requirement plus a dollar amount prescribed by the Board. The bottom of the penalty-free band is equal to the reserve balance requirement minus a dollar amount prescribed by the Board.

6. What dollar amount will be used to set the top and bottom of the penalty-free band?

   For depository institutions that maintain balances directly with the Federal Reserve, the dollar amount used to establish the top and bottom of the penalty-free band is set as the greater of $50,000 or 10 percent of a depository institution’s reserve balance requirement. For pass-through correspondents, the dollar amount used to establish the top and bottom of the penalty-free band is set as an amount that is equal to the greater of $50,000 or 10 percent of the aggregate reserve balance requirement of the correspondent (if any) and all of its respondents. The bottom of the penalty-free band cannot be set below zero.

7. When will a depository institution have satisfied its reserve balance requirement?

   A depository institution will have satisfied its reserve balance requirement when the institution maintains an average balance over a maintenance period that is greater than or equal to the bottom of its penalty-free band.

8. When will a depository institution have an excess balance?

   A depository institution has an excess balance when the institution maintains an average balance over a maintenance period that is greater than the top of its penalty-free band.

9. When is interest paid on balances maintained to satisfy reserve balance requirements and on excess balances?

   Interest payments are credited to a depository institution’s account at the Federal Reserve one business day after the end of a reserve maintenance period.

10. How are interest payments on reserves calculated?

    The amount of interest payable on balances maintained at a Reserve Bank by or on behalf of an eligible institution is equal to the sum of interest on required reserves (IORR) and interest on excess reserves (IOER). IORR is calculated as the arithmetic average of the daily IORR rates in effect over a maintenance period multiplied by the average level of balances up to the top of the penalty-free band maintained over that maintenance period. From July 23, 2015 forward, for depository institutions with excess balances, IOER is calculated by multiplying the IOER rate in effect each day of the maintenance period by the institution’s total balances that day, less an adjustment to avoid the double payment of interest on balances maintained up to the top of the penalty-free band.

    For more information on the final rule amending Regulation D to permit interest payments to be based on a daily interest rate on excess reserves rather than on a maintenance period average rate, please see the corresponding notice in the Federal Register (80 FR 35565) (Off-site). For more information on how interest payments are calculated, including the relevant formulas, please see the Reserve Maintenance Manual (Off-site).

11. Why was the methodology for calculating the interest paid on reserves changed?

    Prior to July 23, 2015, IOER was calculated as the arithmetic average of the daily IOER rate in effect over a maintenance period multiplied by the institution’s average level of excess balances maintained over that maintenance period. That methodology implied that the full effect of an increase in the IOER rate on other short-term market rates may not be realized until the subsequent maintenance period in cases when an IOER rate change did not coincide with the beginning of a maintenance period. Because the current methodology calculates IOER by multiplying the IOER rate in effect each day of the maintenance period by the institution’s total balances that day, the current methodology should allow for any effect of an increase in the IOER rate on other short-term rates to be realized immediately, regardless of when during a maintenance period an IOER rate change takes place.

12. Where can I find the current level of the IORR and IOER Rates?

    From July 23, 2015 forward, the interest rates on balances maintained to satisfy reserve balance requirements and excess balances will be published on the Federal Reserve’s website on the Interest on Required Balances and Excess Balances (Off-site) page.

13. Where can I find past levels of the IORR and IOER Rates?

    Through July 23, 2015, the interest rates paid on balances maintained to satisfy reserve balance requirements and excess balances will be published on a maintenance period average basis on the H.3 statistical release, and the historical rates paid during this period can be found in the H.3 Data Download Program (Off-site).

    From July 23, 2015 forward, the interest rates on balances maintained to satisfy reserve balance requirements and excess balances will be published on the Federal Reserve’s website on the Interest on Required Balances and Excess Balances (Off-site) page, on a daily basis, and will be available in the Policy Rates Data Download Program (Off-site).

14. Will the Reserves Central—Reserve Account Administration application include details on interest payments, including formulas for the calculation of interest on reserves?

    Each maintenance period, the average interest rate on balances up to the top of the penalty-free band (the IORR rate) and the daily IOER rates in effect on each day of that maintenance period will be made available through the Reserves Central—Reserves Account Administration application. The Reserves Central—Reserve Account Administration application will not display the formula for calculating interest payments, but depository institutions can calculate their interest payments using the rates and balances available in the Reporting Central—Reserve Account Administration application and the interest payment formula available in the Reserve Maintenance Manual (Off-site).

15. When will a depository institution be deficient in its reserve balance requirement?

    A depository institution is deficient when the institution maintains an average balance over a maintenance period that is less than the bottom of the penalty-free band.

16. How will the amount of a deficiency be determined?

    The amount of a deficiency is the shortfall between the average end-of-day balance maintained in an institution’s master account during the reserve maintenance period and the bottom of the penalty-free band around the reserve balance requirement.

17. When will a reserve deficiency charge be assessed?

    A reserve deficiency charge is debited from a depository institution’s account at the Federal Reserve five business days after the end of a maintenance period.

Reserves Central — Reserve Account Administration Application

1. Where does the Federal Reserve provide information on a depository institution’s reserve balance requirement?

   Information on a depository institution’s reserve balance requirement is available through the Reserves Central—Reserve Account Administration application.

2. How do I set up access to the Reserves Central—Reserve Account Administration application?

   To help guide your organization through the process, visit the Reserves Central—Reserve Account Administration Application Setup page.

3. Where can I find information on how to use the Reserves Central—Reserve Account Administration application?

   Review the Reserves Central—Reserve Account Administration Step-by-Step Guide (PDF) or the Accessible Version for detailed instructions on how to use the application. Visit the Reserves Central page for additional information.

4. Does my organization have to use the Reserves Central—Reserve Account Administration application?

   No. Your organization does not have to use the Reserves Central—Reserve Account Administration application. Your organization is responsible for satisfying its reserve requirement whether or not your organization uses the application. Reserve requirement and position information are available through the Reserves Central—Reserve Account Administration application.

5. How do I print information within the Reserves Central—Reserve Account Administration application?

   The "View PDF" button contained within the following screens: Reserve Requirements, Reservable Liabilities, Balance Detail, and Interest and Charge Detail, allows you to save and/or print a PDF file of the desired information. Please review the Reserves Central—Reserve Account Administration Step-by-Step Guide (PDF) or the Accessible Version for further information.

6. Whom do I contact for additional information?

   If you need additional information, please contact your Reserves Central District Contact.

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