Pending Deposit and Lending Facility Policy | S-001

[fickogames]

A
POLICY
To
Constitute the Deposit and Lending Facilities​

The Federal Reserve Bank, under the power given by the Federal Reserve Act, enacts the following provisions:
1 - Short Title and Enactment

1. This policy may be cited as the “Deposit and Lending Facility Policy”
2. This policy shall be enacted immediately upon its signage by the Federal Reserve Governor.
3. This policy has been authored by fickogames
4. This policy, upon enactment, rescinds the following policies:
   1. Reserve Requirements & Liquidity Maintenance Policy | R-001
   2. FRB Standing Lending & Repo Facility Policy | M-002
   3. Reserve and Deposit Return Filing Compliance Policy | R-002
   4. Federal Reserve Bank Service Threshold | R-003
   5. Establishment of the Standing Credit Facility | M-003
   6. Establishment of an Interest Rate Corridor Framework | M-005
   7. Recission of Interest on Excess Reserves | M-006

2 - Definitions

Name of Policy/Item	Description of Policy/Item	Relevant descriptor (number or percentage)
FI	(Deposit taking) Financial Institution that has statutory obligation to report deposits to the Federal Reserve Bank.
Deposit Facility	Financial Instrument maintained by the FRB for the purpose of holding required deposits of FIs.
Deposit Account	Account held by the FI, maintained by FRB, in which the required reserve shall reside.
Required Reserve	Percentage of all deposit liabilities required to be held in the Deposit Account.	10%
Interest Bearing Account	Account held by the FI, maintained by FRB, in which the FI deposits money to earn interest, but also be available for quick withdrawal in times of greater than average withdrawals
Lending Facility	Financial Instrument maintained by the FRB for purpose of short term lending issued to FIs to avoid insolvency in times of greater than average withdrawals
Credit Limit Factor	Multiple of the FI monthly income which determines the FI’s eligibility for long term lending.	x8

Rates:

1. The FRB Board may, at any time, at its own discrecion in accordance with the Laws of Redmont and its own internal policy, change these rates.

Policy Rate	Set by FRB every month	0.75%
Lending Interest Rate	Policy Rate + 0.25%	1.00%
Deposit Interest Rate	Policy Rate - 0.25%	0.50%

3 - Deposit Facility

1. The Federal Reserve Bank holds the minimum required reserves of all Deposit Taking Financial Institutions, as required by FRB policy and the Federal Reserve Act.
2. Every FI must be registered with the FRB, and maintain an Deposit Account at all times during its operation.
   1. All newly registered FIs must open a registration ticket with the FRB as soon as possible, and complete the registration procedure before end of 14 days since being registered by the Department of Commerce.
3. Required Reserve, being the percentage of all deposit liabilities, must be maintained within the Deposit Account.
4. Required Reserve is calculated based on last known deposit liabilities, as reported by the FI.

4 - Mandatory Financial Reporting

1. Each 1st of month begins the new monthly accounting cycle.
2. Each 3rd of month, all FIs will be asked to fill out a form, detailing their current deposit liabilities.
3. Reports must be submitted by 7th of the month, otherwise the FI is barred from participating in that and following month’s Reserve Interest Programme.
4. After 5 days of noncompliance, either through nonreporting or deficiencies in the required reserve, the FI will be formally notified of pending FRB violation, and would have 48 hours to resolve the noncompliance, after which the case will be referred for prosecution by relevant authorities.
5. After notification of noncompliance, each day the FI spends in noncompliance, not filing the necessary form and bringing the deposit into required threshold, the FI shall be fined R$ 1,000.
6. If the noncompliance continues into the subsequent month, all outstanding fees are increased by the Lending Interest Rate every 1st of month, and fees continue being incurred daily at rate of R$ 2,500.
7. Upon determination by the Head of Risk & Compliance Division, the FRB shall pursue collection on that debt in any possible way, including seizing of remaining deposits in the FRB and referring the case for prosecution or to the Department of Commerce for winddown under bankruptcy procedure.

5 - Reserve Interest Programme

1. The Federal Reserve Bank launches a programme by the name of “Reserve Interest Programme” to encourage and create incentives for daily financial reporting.
2. Any willing FI may participate in the programme, participation is declared by FI, and FRB creates an Interest Bearing Account in that FI’s name.
3. An unified form shall exist where the FI can submit their current deposit liabilities.
   1. The report may be submitted only every 24 hours
   2. The report shall include FI’s name, account number, and statement of truthfulness, acknowledgment that lying on the form is an act of perjury and any ill gotten gains will be clawed back.
   3. The report shall include the sum of current deposit liabilities.
   4. Choice of way of fixing any deficiencies to the required reserve. The two ways being:
      1. Additional deposit to the Deposit Account by the FI,
      2. Movement of funds from Interest Bearing Account to the Deposit Account, as executed by the FRB.
4. FRB must be given “read only” access to any and all financial documentation of the participating FI.
   1. All such documentation will be classified OFFICIAL under Classification Act for FRB staff. No Freedom of Information request may access such documentation even if in possession of an FRB employee.
5. Each day FRB shall determine truthfulness of the daily reports, required reserve of the FI, and balance of both accounts. FRB shall then do the following:
   1. Any deficiency must be solved before next step is to be taken,
   2. Daily interest (1/30 * Deposit Interest Rate) shall be applied to the balance of the Interest Bearing Account,
   3. Balance of both accounts is taken and reported to the FI.
   4. Any fund movement from Interest Bearing Account to the Deposit Account must be included in the report.
   5. Report is given in text form to the FI ticket in FRB discord.
6. FRB shall keep record of daily and monthly interest paid by this programme and report it as a separate point on the monthly report to Congress.

6 - Repurchase Facility (Repo)

1. The Federal Reserve Bank establishes the Sale and Repurchase Agreement Facility, “repo”, to control and maintain short term deposit and withdrawal volatility.
2. Any FI that holds government issued financial instruments may submit a repo request through the FRB Treasury Dashboard, specifying amount, collateral type, and term.
   1. The term may be of 1 day (overnight), 15 days, 30 days, 60 days, or 90 days.
   2. Eligible financial instruments are those issued by the FRB, such as T-bills and T-bonds.
3. The repo request may only ask for a purchase agreement at 95% of the Treasury issued financial instruments, and such request must not impact the Deposit Account in such a way that the balance of it would fall below the required reserve.
   1. Partial lending is possible, in such a way that required reserve requirement is met after the issuing of the repurchase agreement.
4. Such repo agreement incurs interest in manner described by the following chart:

1 day	15 days	30 days	60 days	90 days
1/30th of Lending Interest Rate	1/2 of Lending Interest Rate	1 * Lending Interest Rate	2 * Lending Interest Rate	3 * Lending Interest Rate
0.042%	0.625%	1.250%	2.500%	3.750%

1. After completion of the term, the collateral must be bought back by the FI, along with incurred interest.
2. Repurchase may be executed sooner than term expiry, removing 0.02% of interest for every day of term remaining.
   1. Such action is not available for 1 day and 15 day repo agreements, or the last 15 days of the agreement.
3. During extreme market stress, the Board may temporarily increase collateralisation limits in such a way to allow more lending, as to avoid bank insolvency. Such action requires no notice and rescinding of such action also does not require notice.

7 - Standing Credit Facility

1. The Federal Reserve Bank establishes the Standing Credit Facility in order to promote further lending operations by commercial banks.
2. Any FI wishing to apply for this form of lending facility may do so in their respective channels.
   1. The FI applying for access to Standing Credit Facility must submit an audited financial statement demonstrating their financial position and operating performance. The FRB may require additional documentation as part of its eligibility review.
3. Each FI shall be given a credit limit based on multiple of their monthly income.
   1. This multiple may deviate from the Credit Limit Factor if the FRB determines the FI may be eligible for more or less lending based on its internal policies, procedures and risk analysis.

7 - Temporary Reserve Waiver[\B]

1. During times of extreme market stress, one or more, or all, FIs may be released from their required deposit, and may be permitted to withdraw all funds from their FRB accounts to settle withdrawals as they come in.
2. This measure, called the Temporary Reserve Waiver (TRW), is in nature temporary, lasting up to 30 days.
3. A TRW may be issued by the Governor of the FRB. The Board may question this decision and/or prohibit the Governor from issuing similar measures for the FI or for similar reasons again, but may not rescind the waiver while it shall still last for more than 10 days.

8 - Withdrawal Processing Limitation[\B]

1. The Federal Reserve Bank must respond to any and all withdrawal requests within 24 hours of request issuance.
2. The FRB reserves the right to stay a withdrawal request for up to 48 hours to review financial documentation of the FI. FRB must issue formal notification of the stay order and its reasoning, explained in as much detail as possible
   1. The stay order notification may also contain a question or request for documentation from the FI, which will help alleviate any issues with the withdrawal order and help in its rescinding before schedule.
   2. A longer lasting stay may be imposed when the FI requesting the withdrawal is involved in a legal case in courts of Redmont.