Pending M-001-A01 | Amendment No. 1 to the RB Discount Rate Policy (M-001)

[DonTrillions]

Motion to Adopt Amendment No. 1 to the FRB Discount Rate Policy (M-001)​

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Category: Monetary Policy
Affected Parties: All Financial Institutions, FRB Treasury & Liquidity Divisions
Minting Required: N
Estimated Cost: N/A
Legal Basis: Federal Reserve Act (FRA) §§ 4, 5, 6, 8, 9, 11

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Background​

The FRB Discount Rate Policy (M-001) establishes the framework governing the application of the Official Discount Rate across all monetary operations.

Following implementation, the Board has identified the need to clarify the periodicity of the Discount Rate to ensure consistent interpretation and application across treasury instruments, reserve remuneration, and liquidity facilities.

This motion introduces a technical clarification only and does not alter the intent, authority, or objectives of the underlying policy.

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Motion​

Be it resolved, by majority vote of the Board, that:

1. Adoption of Amendment​

Amendment No. 1 to the FRB Discount Rate Policy (M-001) is hereby adopted.

The Amendment clarifies that the Official Discount Rate is quoted, applied, and settled on a monthly basis, and is not annualized, unless explicitly stated in a separate policy or instrument.

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2. Amendment to Policy Text​

In Section 3 (Definition and Scope) of the FRB Discount Rate Policy (M-001), the phrase:

“nominal annualized interest rate”

is replaced with:

“nominal monthly interest rate”

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3. Application of the Discount Rate​

All applications of the Discount Rate — including but not limited to:

• FRB Treasury Bills,
• Interest on Excess Reserves,
• Repurchase agreements,
• Collateralized and emergency liquidity facilities,

shall apply the monthly Discount Rate directly, without annualization or implied compounding, unless expressly stated otherwise.

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4. Nature of Amendment​

This Amendment is interpretive and technical in nature and shall not be construed as:

• A change in monetary stance,
• A change in policy intent,
• A modification of Board authority, or
• A revision of existing contractual obligations.

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5. Effective Date​

This Amendment shall take effect immediately, following public notice and shall apply to all transactions and instruments issued thereafter.

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6. Recordkeeping and Oversight​

All supporting records shall be retained by the FRB Treasury Division.
The Inspector-General shall maintain full audit access in accordance with FRA § 8.

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7. Voting Requirement​

A simple majority of Sitting Members of the Board is required for adoption.
The DOC Secretary shall vote only in the event of a tie.

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8. Publication​

Upon passage, this Motion shall be:

• Entered into the official Board minutes, and
• Published in the next Monthly FRB Report.