Pending Statutory Reserve Enforcement Policy | ST-010

[DonTrillions]

Category: Banking Regulation

Affected Parties: Federal Reserve Bank, Commercial Banks, Credit Unions

Minting Required: N

Estimated Cost: N/A

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Preamble​

Whereas safeguarding the solvency of financial institutions is critical to national economic security,
And whereas the Federal Reserve Bank is mandated to uphold stable and transparent monetary infrastructure,

Be it enacted by the Federal Reserve Bank of Redmont:

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Section 1: Short Title​

This Policy shall be known as the "Statutory Reserve Enforcement Policy."

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Section 2: Definitions​

• Reserve Requirement: The proportion of total customer deposits that must be held in reserve at the Federal Reserve Bank.
• Depository Institutions: Licensed commercial banks and credit unions operating in the Commonwealth.
• Total Customer Deposits: The sum of all funds held by customers at a depository institution, including current, savings, fixed-term, and certificate accounts.
• Certified Report: A report attested by an authorized officer verifying deposit figures submitted to the FRB.

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Section 3: Reserve Requirements​

3.1 Mandatory Reserve Ratio​

All Depository Institutions must hold reserves equal to 10% of total customer deposits, maintained at all times with the Federal Reserve Bank.

3.2 Monthly Reporting​

1. On or before the 5th calendar day of each month, institutions must submit a Certified Reserve Report stating:
   • Total customer deposits as of the last day of the previous month
   • Total reserves held at the FRB
2. The FRB will assess compliance based on this monthly declaration.

3.3 Compliance and Enforcement​

1. Any institution found holding less than 10% in reserve shall be notified and must rectify the shortfall within five (5) business days.
2. Repeat or willful noncompliance will trigger disciplinary action in accordance with Section 4.

3.4 Interest on Reserves​

The Federal Reserve Bank shall pay interest on reserves held by depository institutions at a rate equal to the prevailing Discount Rate, as established in FRB fiscal policy.
Interest shall be calculated monthly and paid on the 1st calendar day of each month, based on the institution’s reported reserve balance for the previous month.
The reserve interest rate shall automatically adjust in response to any changes to the Discount Rate without requiring a separate vote.

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Section 4: Oversight and Sanctions​

4.1 Authority to Amend​

The FRB Board may, by majority vote, adjust the reserve requirement ratio in response to macroeconomic changes or systemic risk.

4.2 Penalties​

Noncompliant institutions may face:

• Monetary penalties of up to 5% of the reserve deficit
• Restrictions on access to FRB liquidity instruments
• Public listing as noncompliant in FRB compliance bulletins

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Section 5: Transparency and Disclosure​

1. The FRB shall publish a monthly Reserve Compliance Report by the 15th of each month, detailing institution-by-institution compliance status.
2. Any policy changes must be publicly announced at least seven (7) days prior to enforcement.

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Section 6: Emergency Powers​

In times of financial instability, the FRB Governor may enact temporary changes to the reserve requirement or reporting timelines, subject to ratification by the Board within 30 days.

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Section 7: Effective Date​

This policy is effective as of June 01, 2025, and supersedes all prior reserve requirement directives.