As announced on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions.
The following content explains the Board’s authority to impose reserve requirements and how reserve requirements were administered prior to the change in reserve requirement ratios to zero.
The Federal Reserve Act authorizes the Board to establish reserve requirements within specified ranges for purposes of implementing monetary policy on certain types of deposits and other liabilities of depository institutions.
The dollar amount of a depository institution's reserve requirement is determined by applying the reserve requirement ratios specified in the Board's Regulation D (Reserve Requirements of Depository Institutions, 12 CFR Part 204) to an institution's reservable liabilities (see table of reserve requirements). The Federal Reserve Act authorizes the Board to impose reserve requirements on transaction accounts, nonpersonal time deposits, and Eurocurrency liabilities.
Prior to the change effective March 26, 2020, reserve requirement ratios on net transactions accounts differed based on the amount of net transactions accounts at the depository institution. A certain amount of net transaction accounts, known as the "reserve requirement exemption amount," was subject to a reserve requirement ratio of zero percent. Net transaction account balances above the reserve requirement exemption amount and up to a specified amount, known as the "low reserve tranche," were subject to a reserve requirement ratio of 3 percent. Net transaction account balances above the low reserve tranche were subject to a reserve requirement ratio of 10 percent. The reserve requirement exemption amount and the low reserve tranche are indexed each year pursuant to formulas specified in the Federal Reserve Act (see table of low reserve tranche amounts and exemption amounts since 1982).
For more history on the changes in reserve requirement ratios and the indexation of the exemption and low reserve tranche, see the annual review table. Additional details on reserve requirements can be found in the Reserve Maintenance Manual and in the article (119 KB PDF) in the Federal Reserve Bulletin, the appendix of which has tables of historical reserve ratios.
|% of liabilities||Effective date|
|Net transaction accounts||0||3/26/2020|
|Nonpersonal time deposits||0||12/27/1990|
Notes: The Board's Regulation D (Reserve Requirements of Depository Institutions) provides that reserve requirements must be satisfied by holding vault cash and, if vault cash is insufficient, by maintaining a balance in an account at a Federal Reserve Bank. An institution may hold that balance directly with a Reserve Bank or with another institution in a pass-through relationship. Reserve requirements are imposed on "depository institutions," defined as commercial banks, savings banks, savings and loan associations, credit unions, U.S. branches and agencies of foreign banks, Edge corporations, and agreement corporations.
1. For a description of these deposit types, see Form FR 2900 at http://www.federalreserve.gov/apps/reportforms/default.aspx. Return to table
Low Reserve Tranche Amounts and Exemption Amounts since 1982
(beginning of maintenance period)
|Low reserve tranche amount
(millions of U.S. dollars)
(millions of U.S. dollars)
|January 14, 1982||26.0||n.a.|
|December 23, 1982||n.a.||2.1|
|January 13, 1983||26.3||***|
|January 12, 1984||28.9||2.2|
|January 3, 1985||29.8||2.4|
|January 2, 1986||31.7||2.6|
|January 1, 1987||36.7||2.9|
|December 31, 1987||40.5||3.2|
|December 29, 1988||41.5||3.4|
|December 28, 1989||40.4||3.4|
|December 27, 1990||41.1||3.4|
|December 26, 1991||42.2||3.6|
|December 24, 1992||46.8||3.8|
|December 23, 1993||51.9||4.0|
|December 22, 1994||54.0||4.2|
|December 21, 1995||52.0||4.3|
|December 31, 1996||49.3||4.4|
|January 1, 1998||47.8||4.7|
|December 31, 1998||46.5||4.9|
|December 30, 1999||44.3||5.0|
|December 28, 2000||42.8||5.5|
|December 27, 2001||41.3||5.7|
|December 26, 2002||42.1||6.0|
|December 25, 2003||45.4||6.6|
|December 23, 2004||47.6||7.0|
|December 22, 2005||48.3||7.8|
|December 21, 2006||45.8||8.5|
|December 20, 2007||43.9||9.3|
|January 1, 2009||44.4||10.3|
|December 31, 2009||55.2||10.7|
|December 30, 2010||58.8||10.7|
|December 29, 2011||71.0||11.5|
|December 27, 2012||79.5||12.4|
|January 23, 2014||89.0||13.3|
|January 22, 2015||103.6||14.5|
|January 21, 2016||110.2||15.2|
|January 19, 2017||115.1||15.5|
|January 18, 2018||122.3||16.0|
|January 17, 2019||124.2||16.3|
|January 16, 2020||127.5||16.9|
|January 14, 2021||182.9||21.1|