Monetary Policy Improvement Act

Summary

Monetary Policy Improvement Act - Amends the Federal Reserve Act to define the term "depository institution" to include federally insured banks, mutual savings banks, credit unions, and savings and loan institutions, and the term "transaction account" to mean a deposit or account on which the depository or account holder is allowed to make withdrawals by negotiable or transferable instrument for the purpose of making his payments to third persons. Authorizes the Board of Governors of the Federal Reserve System to require any depository institution to make such reports of its liabilities and assets as the Board determines necessary to control monetary and credit aggregates. Imposes reserve requirements on the demand and savings deposits of insured banks in excess of $40,000,000 in a ratio of nine percent. States that reserves shall be between eight and ten percent and that changes in the reserve ratio shall be made solely for the purpose of implementing monetary policy. Lowers reserve requirements for insured banks and for all other depository institutions. Establishes reserve requirements on time deposits of insured banks in excess of $40,000,000. Sets the limits of such ratios at one and six percent. Establishes different ratios for time deposits with maturities under and over 180 days. Establishes a reserve requirement on the transaction accounts of all depository institutions in excess of $40,000,000 in a ratio of nine percent. States that reserves shall be between eight and ten percent and that changes in the reserve ratio shall be made solely for the purpose of implementing monetary policy. Authorizes the Board, in extraordinary circumstances, to impose reserve requirements outside the normal requirements. Eliminates the use of different ratios for member banks not in reserve cities. Permits nonmember banks not maintaining reserves pursuant to this Act the same discount and borrowing privileges as member banks except that a certification of solvency may be required. Provides a four-year transition period for nonmember banks to implement the reserve requirements of this Act. Establishes a similar graduated implementation for member banks. Authorizes the Board to permit a depository institution, which is a member of a Federal Reserve bank, to maintain required reserves in the form of vault cash. Requires a nonmember bank to maintain reserves in balances in a bank that maintains required reserve balances at a Federal Reserve Bank, in a federal home loan bank, or in a central liquidity facility that may be established for credit unions. Requires the Board to publish for public comment a set of pricing principles and a proposed schedule of fees for Federal Reserve System Services. Requires the Board to establish a committee on reserve requirements for money substitutes, including bank and nonbank liabilities that are substitutes for demand deposits. Directs the committee to study the need for legal reserve requirements against short-term liabilities of bank and nonbank depository institutions, and other financial institutions offering short-term money substitutes, and to recommend appropriate administrative actions and legislation.

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1 official file

• Introduced in Senate

  summary · EN · 7 September 1978

  Open at official source

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