[Federal Register Volume 86, Number 171 (Wednesday, September 8, 2021)]
[Rules and Regulations]
[Pages 50213-50214]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-19280]



========================================================================
Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 

========================================================================


Federal Register / Vol. 86, No. 171 / Wednesday, September 8, 2021 / 
Rules and Regulations

[[Page 50213]]



FEDERAL RESERVE SYSTEM

12 CFR Part 204

[Docket No. R-1754]
RIN 7100-AG 18


Regulation D: Reserve Requirements of Depository Institutions

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Board of Governors of the Federal Reserve System 
(``Board'') is amending Regulation D, Reserve Requirements of 
Depository Institutions, to revise the rate of interest paid on 
balances maintained at Federal Reserve Banks by or on behalf of 
eligible institutions (``IORB'' rate). The final amendments specify 
that the IORB rate is 0.15 percent, an 0.05 percentage point increase 
from its prior level. The amendment is intended to establish the IORB 
rate at a level consistent with maintaining the Federal funds rate in 
the target range established by the Federal Open Market Committee 
(``FOMC'' or ``Committee''). This amendment does not reflect a change 
in the stance of monetary policy. The Board is also making certain 
conforming deletions for clarity to the provisions of Regulation D 
governing interest payable on balances at Reserve Banks.

DATES: 
    Effective date: The amendments to part 204 (Regulation D) are 
effective September 8, 2021.
    Applicability date: The IORB rate change was applicable on July 29, 
2021.

FOR FURTHER INFORMATION CONTACT: Sophia H. Allison, Senior Special 
Counsel (202-452-3565), Legal Division, or Laura Lipscomb, Deputy 
Associate Director (202-834-2979), Division of Monetary Affairs; for 
users of Telecommunications Device for the Deaf (TDD) only, contact 
202-263-4869; Board of Governors of the Federal Reserve System, 20th 
and C Streets NW, Washington, DC 20551.

SUPPLEMENTARY INFORMATION:

I. Statutory and Regulatory Background

    Section 19 of the Federal Reserve Act (``Act'') provides that 
balances maintained by or on behalf of certain institutions in an 
account at a Federal Reserve Bank (``Reserve Bank'') may receive 
earnings to be paid by the Reserve Bank at least once each quarter, at 
a rate or rates not to exceed the general level of short-term interest 
rates.\1\ Institutions that are eligible to receive earnings on their 
balances held at Reserve Banks (``eligible institutions'') include 
depository institutions and certain other institutions.\2\ Section 19 
also provides that the Board may prescribe regulations concerning the 
payment of earnings on balances at a Reserve Bank.\3\
---------------------------------------------------------------------------

    \1\ 12 U.S.C. 461(b)(1)(A) & (b)(12)(A).
    \2\ See 12 U.S.C. 461(b)(1)(A) & (b)(12)(C); see also 12 CFR 
204.2(y).
    \3\ See 12 U.S.C. 461(b)(12)(B).
---------------------------------------------------------------------------

    On June 4, 2021, the Board published a final rule in the Federal 
Register amending Regulation D, effective July 29, to eliminate 
references to ``IORR'' and ``IOER'' and replace those references with 
references to a single ``IORB'' (interest on reserve balances) rate and 
to establish the IORB rate at 0.10 percent.\4\
---------------------------------------------------------------------------

    \4\ Final Rule, 86 FR 29937 (June 4, 2021).
---------------------------------------------------------------------------

II. Amendments to IORB

    The Board is amending Sec.  204.10(b)(1) of Regulation D to 
establish the IORB rate at 0.15 percent. The amendment represents a 
0.05 percentage point increase in the IORB rate. This decision was 
announced on July 28, 2021, with an effective date of July 29, 2021, in 
the Federal Reserve Implementation Note (``Implementation Note'') that 
accompanied the FOMC's statement on July 28, 2021 (``FOMC Statement''). 
The FOMC Statement stated that the Committee decided to maintain the 
target range for the Federal funds rate at 0 to \1/4\ percent.
    The Federal Reserve Implementation Note stated:

    The Board of Governors of the Federal Reserve System voted 
unanimously to establish the interest rate paid on reserve balances 
at 0.15 percent, effective July 29, 2021.

    The Implementation Note further stated:

    As announced on June 2, 2021, the Federal Reserve Board approved 
a final rule, effective July 29, amending Regulation D to eliminate 
references to an interest on required reserves (IORR) rate and to an 
interest on excess reserves (IOER) rate and replace them with a 
single interest on reserve balances (IORB) rate. Therefore, the 
Board voted on one rate, the IORB rate, at this meeting and will 
continue to do so going forward.

    As a result, the Board is amending Sec.  204.10(b)(1) of Regulation 
D to establish the IORB rate at 0.15 percent. The amendment is intended 
to establish the IORB rate at a level consistent with maintaining the 
Federal funds rate in the target range established by the Committee. 
This amendment does not reflect a change in the stance of monetary 
policy.
    Finally, the Board is also making certain conforming deletions for 
clarity to the provisions of Regulation D governing interest payable on 
balances at Reserve Banks.

III. Administrative Procedure Act

    In general, the Administrative Procedure Act (``APA'') \5\ imposes 
three principal requirements when an agency promulgates legislative 
rules (rules made pursuant to Congressionally-delegated authority): (1) 
Publication with adequate notice of a proposed rule; (2) followed by a 
meaningful opportunity for the public to comment on the rule's content; 
and (3) publication of the final rule not less than 30 days before its 
effective date. The APA provides that notice and comment procedures do 
not apply if the agency for good cause finds them to be ``unnecessary, 
impracticable, or contrary to the public interest.'' \6\ Section 553(d) 
of the APA also provides that publication at least 30 days prior to a 
rule's effective date is not required for (1) a substantive rule which 
grants or recognizes an exemption or relieves a restriction; (2) 
interpretive rules and statements of policy; or (3) a rule for which 
the agency finds good cause for shortened notice and publishes its 
reasoning with the rule.\7\
---------------------------------------------------------------------------

    \5\ 5 U.S.C. 551 et seq.
    \6\ 5 U.S.C. 553(b)(3)(A).
    \7\ 5 U.S.C. 553(d).
---------------------------------------------------------------------------

    The Board has determined that good cause exists for finding that 
the notice, public comment, and delayed effective

[[Page 50214]]

date provisions of the APA are unnecessary, impracticable, or contrary 
to the public interest with respect to these final amendments to 
Regulation D. The rate change for IORB that is reflected in the final 
amendment to Regulation D was made with a view towards accommodating 
commerce and business and with regard to their bearing upon the general 
credit situation of the country. Notice and public comment would 
prevent the Board's action from being effective as promptly as 
necessary in the public interest and would not otherwise serve any 
useful purpose. Notice, public comment, and a delayed effective date 
would create uncertainty about the finality and effectiveness of the 
Board's action and undermine the effectiveness of that action. 
Accordingly, the Board has determined that good cause exists to 
dispense with the notice, public comment, and delayed effective date 
procedures of the APA with respect to this final amendment to 
Regulation D.

IV. Regulatory Flexibility Analysis

    The Regulatory Flexibility Act (``RFA'') does not apply to a 
rulemaking where a general notice of proposed rulemaking is not 
required.\8\ As noted previously, the Board has determined that it is 
unnecessary and contrary to the public interest to publish a general 
notice of proposed rulemaking for this final rule. Accordingly, the 
RFA's requirements relating to an initial and final regulatory 
flexibility analysis do not apply.
---------------------------------------------------------------------------

    \8\ 5 U.S.C. 603, 604.
---------------------------------------------------------------------------

V. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act (``PRA'') of 
1995,\9\ the Board reviewed the final rule under the authority 
delegated to the Board by the Office of Management and Budget. The 
final rule contains no requirements subject to the PRA.
---------------------------------------------------------------------------

    \9\ 44 U.S.C. 3506; see 5 CFR part 1320, appendix A.1.
---------------------------------------------------------------------------

List of Subjects in 12 CFR Part 204

    Banks, Banking, Reporting and recordkeeping requirements.

Authority and Issuance

    For the reasons set forth in the preamble, the Board amends 12 CFR 
part 204 as follows:

PART 204--RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS 
(REGULATION D)

0
1. The authority citation for part 204 continues to read as follows:

    Authority: 12 U.S.C. 248(a), 248(c), 461, 601, 611, and 3105.


0
2. Section 204.10 is amended by:
0
a. Revising paragraph (b)(1);
0
b. Removing paragraphs (b)(4) and (5) and (d)(5); and
0
c. Redesignating paragraph (d)(6) as paragraph (d)(5).
    The revision reads as follows:


Sec.  204.10   Payment of interest on balances.

* * * * *
    (b) * * *
    (1) For balances maintained in an eligible institution's master 
account, interest is the amount equal to the interest on reserve 
balances rate (``IORB rate'') on a day multiplied by the total balances 
maintained on that day. The IORB rate is 0.15 percent.
* * * * *

    By order of the Board of Governors of the Federal Reserve 
System.
Ann Misback,
Secretary of the Board.
[FR Doc. 2021-19280 Filed 9-7-21; 8:45 am]
BILLING CODE 6210-01-P