Reserves and the FR2900

1
Reserves and the FR2900

• Gina Manco

2
Reserve Requirements

• Reserve Requirements are
• Based on Net Transaction Accounts (NTA)
• Monies to be held or set aside
• In the form of vault cash
• At the Federal Reserve
• In a correspondent pass through account

3
Key Definitions

• Reserve balance requirement Total required
  reserves vault cash
• Clearing balance requirement Contracted balance
  to be maintained at the Federal Reserve
• Total requirement Reserve balance requirement
  clearing balance requirement
• Computation period FR2900 report weeks from
  which total required reserves are calculated
• Maintenance period The period of time for which
  reserve requirements are held

4
Computation Period

• Weekly reporters 14 day average of FR2900 data
  reported
• Quarterly reporters 7 day average of FR2900
  data from each quarterly report

5
Maintenance Period

• Weekly reporters 14 day period starting
  Thursday and ending on Wednesday four weeks after
  the computation period
• Quarterly reporters 7 day period starting
  Thursday and ending on Wednesday four weeks after
  the computation period and continuing for
  thirteen consecutive weeks

6
The Calculation of Reserves
Weekly Reporters
Computation Period
Maintenance Period
7
The Calculation of Reserves
Quarterly Reporters
Computation
Period Maintenance Period
8
The Calculation of Reserves

• How are reserves calculated?
• Compute 14 day average of A3, AA1, B1, and B2
  from two 2900 reports
• Compute average NTA ? A3AA1-B1-B2
• First 7.8M ? multiply by 0
• Next 40.5M ? multiply by 3
• Remaining balance ? multiply by 10
• Add steps 3-5 results ? required reserves

9
Reserve Calculation Exercise
10
Reserve Calculation Exercise
Weekly Reporters
(1) Total first Week
(2) Total second week
(3) Computation period total
(4) 14-day average
FR 2900 ITEMS
527,366
543,667


1,071,033
76,502
? 14
A . 3 Total transaction accounts AA . 1
Ineligible acceptances and obligations
issued be affiliates maturing in less than 7
days B.1 Demand balances due from
depository institutions in the U.S. B.2
Cash Items in process of collection E .1
Vault Cash
0
0
0
0


? 14
10,000
70,000
70,000
140,000


? 14

35,000
35,000
70,000
5,000

? 14


21,000
21,000
42,000
3,000
? 14
11
Reserve Calculation Exercise
Weekly Reporters
(1) Total first Week
(2) Total second week
(3) Computation period total
(4) 14-day average
FR 2900 ITEMS
527,366
543,667


1,071,033
76,502
? 14
A . 3 Total transaction accounts AA . 1
Ineligible acceptances and obligations
issued be affiliates maturing in less than 7
days B.1 Demand balances due from
depository institutions in the U.S. B.2
Cash Items in process of collection E .1
Vault Cash
0
0
0
0


? 14
10,000
70,000
70,000
140,000


? 14

35,000
35,000
70,000
5,000

? 14


21,000
21,000
42,000
3,000
? 14
12
Reserve Calculation Exercise
Weekly Reporters
(1) Total first Week
(2) Total second week
(3) Computation period total
(4) 14-day average
FR 2900 ITEMS
527,366
543,667


1,071,033
76,502
? 14
A . 3 Total transaction accounts AA . 1
Ineligible acceptances and obligations
issued be affiliates maturing in less than 7
days B.1 Demand balances due from
depository institutions in the U.S. B.2
Cash Items in process of collection E .1
Vault Cash
0
0
0
0


? 14
318
2,082
2,375
4,457


? 14

35,000
35,000
70,000
5,000

? 14


21,000
21,000
42,000
3,000
? 14
13
Reserve Calculation Exercise
Weekly Reporters
(1) Total first Week
(2) Total second week
(3) Computation period total
(4) 14-day average
FR 2900 ITEMS
527,366
543,667


1,071,033
76,502
? 14
A . 3 Total transaction accounts AA . 1
Ineligible acceptances and obligations
issued be affiliates maturing in less than 7
days B.1 Demand balances due from
depository institutions in the U.S. B.2
Cash Items in process of collection E .1
Vault Cash
0
0
0
0


? 14
318
2,082
2,375
4,457


? 14

31,307
36,546
67,853
4,847

? 14


21,000
21,000
42,000
3,000
? 14
14
Reserve Calculation Exercise
Weekly Reporters
(1) Total first Week
(2) Total second week
(3) Computation period total
(4) 14-day average
FR 2900 ITEMS
527,366
543,667


1,071,033
76,502
? 14
A . 3 Total transaction accounts AA . 1
Ineligible acceptances and obligations
issued be affiliates maturing in less than 7
days B.1 Demand balances due from
depository institutions in the U.S. B.2
Cash Items in process of collection E .1
Vault Cash
0
0
0
0


? 14
318
2,082
2,375
4,457


? 14

31,307
36,546
67,853
4,847

? 14


25,150
24,249
49,399
3,529
? 14
15
Reserve Calculation Exercise
14-day average
A. Gross transaction accounts
A. 3 Total transaction accounts AA. 1
Ineligible acceptances and obligations issued by
affiliates maturing in less than seven days B. 1
Demand balances due from depository institution
in the U.S. B.2 Cash items in process of
collection
76,502
Net transaction accounts
76,502


0
85,000

(If negative set to zero)
B. Total deductions
10,000
15,000


5,000
16
Reserve Calculation Exercise
14-day average
A. Gross transaction accounts
A. 3 Total transaction accounts AA. 1
Ineligible acceptances and obligations issued by
affiliates maturing in less than seven days B. 1
Demand balances due from depository institution
in the U.S. B.2 Cash items in process of
collection
76,502
Net transaction accounts
76,502


0
85,000

(If negative set to zero)
B. Total deductions
318
5,165


4,847
17
Reserve Calculation Exercise
14-day average
A. Gross transaction accounts
A. 3 Total transaction accounts AA. 1
Ineligible acceptances and obligations issued by
affiliates maturing in less than seven days B. 1
Demand balances due from depository institution
in the U.S. B.2 Cash items in process of
collection
76,502
Net transaction accounts
76,502


0
71,337

-
(If negative set to zero)
B. Total deductions
318
5,165


4,847
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Reserve Calculation Exercise
Net transaction accounts
Exemption NTA gt Exemption
Net transaction accounts gt low reserve trance
Application of tranche
Low reserve tranche
48,300
Exemption
7,800
Adjusted tranche
40,500
Net transaction accounts gt exemption
Net transaction accounts lt adjusted tranche
Exemption
_
71,337
7,800
-

63,537
40,500
23,037

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Reserve Calculation Exercise
A. On transaction accounts lt adjusted tranche
A. Amount lt adjusted tranche
Total reserve requirement
40,500
x .03
1, 215

4,885

B. On transaction accounts gt low reserve tranche
B. Amount gt low reserve tranche
x .10
3,670
36,700
20
Reserve Calculation Exercise
A. On transaction accounts lt adjusted tranche
A. Amount lt adjusted tranche
Total reserve requirement
40,500
x .03
1, 215

4,885

B. On transaction accounts gt low reserve tranche
B. Amount gt low reserve tranche
x .10
2,304
23,037
21
Reserve Calculation Exercise
A. On transaction accounts lt adjusted tranche
A. Amount lt adjusted tranche
Total reserve requirement
40,500
x .03
1, 215

3,519

B. On transaction accounts gt low reserve tranche
B. Amount gt low reserve tranche
x .10
2,304
23,037
22
Reserve Calculation Exercise
1. Total reserve requirement 2. Less Vault
cash (FR 2900 Item E.1, Section 1, Column 4) 3.
Equals Reserve balance requirement
3,519
-
3,000

1,885
23
Reserve Calculation Exercise
1. Total reserve requirement 2. Less Vault
cash (FR 2900 Item E.1, Section 1, Column 4) 3.
Equals Reserve balance requirement
3,519
3,529
-

1,885
24
Reserve Calculation Exercise
1. Total reserve requirement 2. Less Vault
cash (FR 2900 Item E.1, Section 1, Column 4) 3.
Equals Reserve balance requirement
3,519
-
3,529

0
25
WE DID IT!!
26
References

• Reserve Maintenance Manual
• www.frbservices.org/Accounting/pdf/rmm.pdf
• Reserve Calc
• www.federalreserve.org/reserves/reserves/home.do
• Credit Risk Department
• [phone]

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• Gina Manco, Sr. Financial Analyst
• 216-579-2952
• gmanco_at_clev.frb.org
• Customer Contact Center (Reserve Calc)
• 888-333-7010