Reserves Administration Frequently Asked Questions

Below are responses to frequently asked questions about reserves administration. If your question is not answered by the information provided within these FAQs or the Reserves Central page, please contact your Reserves Central District Contact or the Federal Reserve's Customer Contact Center.

Reserves Administration

1. What is a maintenance period?

   A maintenance period consists of 14 consecutive calendar days beginning on a Thursday and ending on the second Wednesday thereafter.

2. When is interest paid on balances maintained in a depository institution’s account at the Federal Reserve?

   Interest payments are credited to a depository institution’s account at the Federal Reserve one calendar day after the end of a maintenance period. As part of the Federal Reserve’s move to a seven-day accounting week, calendar days now encompass both the standard Monday to Friday business days (excluding Federal Reserve holidays) and non-standard business days (Saturdays, Sundays, and all Federal Reserve holidays). 

3. How are interest payments on reserve balances calculated?

   Interest on reserve balances is calculated by multiplying the End of Day balance in the account by the Interest on Reserve Balances (IORB) rate in effect for that day. The End of Day balance used in the interest calculation is in dollars and cents (no rounding). At the end of the maintenance period, the total interest for each day of the maintenance period will be summed and paid.

4. Has the methodology for calculating the interest paid on reserve balances changed?

   Effective on July 29, 2021, the interest calculation for reserve balances held on a given day was simplified to the End of Day balance maintained on that day multiplied by the IORB rate in effect on that day.
   
   From July 24, 2015 to July 28, 2021, Interest on Required Reserves (IORR) was calculated using the cumulative average of required reserve balances multiplied by the IORR rate, and Interest on Excess Reserves (IOER) was calculated by multiplying the IOER rate in effect each day of the maintenance period by the institution’s balances that day. This methodology allowed for any effect of an increase in the IOER rate on other short-term rates to be realized immediately, regardless of when an IOER rate change took place during a maintenance period.
   
   Prior to July 23, 2015, IOER was calculated as the arithmetic average of the daily IOER rate in effect over a maintenance period multiplied by the institution’s average level of excess balances maintained over that maintenance period. In cases when an IOER rate change did not occur at the beginning of a maintenance period, the full effect of an IOER rate increase on other short-term market rates may not be realized until the subsequent maintenance period.

5. Where can I find the current level of the IORB rate?

   The IORB rate on balances maintained at a Reserve Bank by or on behalf of an eligible institution is published on the Federal Reserve’s website on the Interest on Reserve Balances (Off-site) page.

6. Where can I find past levels of the IORB rate or the IORR and IOER rates?

   Historical levels for all rates can be found in the Board’s Data Download Program (Off-site).

7. Does the Reserves Central application include details on interest payments, including formulas for the calculation of interest on reserve balances?

   Each maintenance period, the IORB rate in effect on each day of that maintenance period is made available through the Reserves Central application. The application displays the interest earned for each day and the total interest payment for the maintenance period. The application does not display the formula for calculating interest payments, but depository institutions can calculate their interest payments using the rates and End of Day balances available in the application for that maintenance period.

Reserves Central Application

1. Where does the Federal Reserve provide information on a depository institution’s reserve balances and interest earned on those balances?

   Information on a depository institution’s End of Day balances and interest earned on those balances is available through the Reserves Central application.

2. How do I set up access to the Reserves Central application?

   To help guide your organization through the process, visit the Reserves Central Application Setup page.

3. Where can I find information on the functionality within the Reserves Central application?
   For information on specific functionality within the Reserves Central application, please refer to the User Guide which is available in the FedLine^® Training Center. Log in to FedLine Home via FedLine Web^® and select the link to “Training” in the upper right-hand corner of the screen. The User Guide is available under the Central Bank, Reserves Central menu.
    
4. Does my organization have to use the Reserves Central application?

   No. Your organization does not have to use the Reserves Central application. However, information on End of Day balances and interest earned on those balances are available through the application.

5. How do I print information within the Reserves Central application?

   The "View PDF" button contained within the Balance Detail and Interest and Charge Detail screens allows you to save and/or print a PDF file of the desired information.

6. Whom do I contact for additional information?

   If you need additional information, please contact your Reserves Central District Contact.

7. Why were the screens in the Reserves Central application changed on November 4, 2021?

   Given that reserve ratios were set to zero in March 2020 and there is now a single interest rate on reserve balances, the Interest on Reserve Balances (IORB) rate, there is no longer a need to provide information related to reserve requirements and the penalty-free band. The IORB rate is paid by the Federal Reserve Bank on all balances maintained by or on behalf of an eligible institution in an account at a Federal Reserve Bank. The Reserves Central application will continue to display maintenance period, End of Day balances and interest payment detail.

8. What changes were made to the Reserves Central application screens on November 4, 2021?

   The screens and information displayed within the application were streamlined. When viewing a maintenance period from November 4, 2021 forward, the Reserves Central application will not display information on reserve requirements and the penalty-free band. Maintenance periods prior to November 4, 2021 will display past reserve requirement and penalty-free band information.

   For the current maintenance period, you can view End of Day balances by selecting the “Details” link displayed in the Account Balance column.

   After the maintenance period has ended, you can view End of Day balances, the interest rate, and interest payment details by clicking on the “Interest Payment Amount” link in the Interest column.

Federal Reserve Banks Transition to a Seven-Day Accounting Week

1. What are the key elements of the Federal Reserve’s seven-day accounting week?

   The Federal Reserve System adopted a seven-day accounting week regime to support the FedNow^® Service infrastructure, which is operational 24 hours a day, 7 days a week, 365 days a year.

   Under the seven-day accounting week, every calendar day is a business day and therefore is a Federal Reserve Bank accounting cycle date. In the seven-day accounting week regime, business days are defined as:

   • Standard Business Days, which are Monday through Friday, excluding Federal Reserve holidays; and
   • Non-Standard Business Days, which include Saturday, Sunday and all Federal Reserve holidays.

   
    
2. What does the Federal Reserve’s change to a seven-day accounting week mean for Reserves Administration?

   The Reserves Central application has always recognized all End of Day balances throughout the 14-day maintenance period and will continue to do so. If your depository institution participates in the FedNow Service and has activity in your account on weekends and holidays, the Reserves Central application will recognize that activity in your End of Day account balances.

   The one change that will impact all institutions eligible for interest on reserve balances, whether or not your institution participates in the FedNow service, is that posting of interest payments will always occur one calendar day after the end of a maintenance period, even if that day is a holiday.

3. Does the change to a seven-day accounting week affect the maintenance period schedule for depository institutions?

   No. There is no change to the duration or schedule for maintenance periods. A maintenance period continues to consist of 14 consecutive calendar days beginning on a Thursday and ending on the second Wednesday thereafter.

4. What effect does the seven-day accounting cycle have on the balances held in the Reserve Account of a depository institution?

   With the Federal Reserve’s adoption of a seven-day accounting week, every calendar day is a business day and is defined as either a standard business day (Monday through Friday, excluding Federal Reserve holidays) or a non-standard business day (Saturday, Sunday and all Federal Reserve holidays). Therefore, for a depository institution that is a FedNow Service participant, the account balance will change on all standard business days and all non-standard business days based on transaction activity.

   For a depository institution that is not a FedNow Service participant, the account balance will change on standard business days based on transaction activity and in rare circumstances the balance will change on a non-standard business day such as when an interest payment date falls on a Federal Reserve holiday. In the event of a holiday coinciding with an interest payment date, the Federal Reserve Bank will credit the account with the interest payment on the holiday.

5. Does the seven-day accounting week impact when interest is paid on balances maintained in a depository institution’s account at the Federal Reserve?

   Yes. In rare instances the seven-day accounting week will impact when interest is paid.  Previously, interest payments were credited to a depository institution’s account at the Federal Reserve Bank one business day after the end of a maintenance period. With the Federal Reserve’s move to a seven-day accounting week, interest payments are now credited to a depository institution’s account at the Federal Reserve Bank one calendar day after the end of a maintenance period. In the seven-day accounting week regime, business days include standard business days and non-standard business days. Therefore, on occasions when an interest payment date falls on a Federal Reserve holiday (a non-standard business day), the interest payment will be credited to a depository institution’s account at the Federal Reserve Bank on the holiday.

   For example, Thursday, November 28, 2024, is a holiday. In the Federal Reserve Bank’s seven-day accounting week, Thursday, November 28, 2024, is a non-standard business day. In addition, in the Federal Reserve's 2024 Maintenance Period Schedule, Thursday, November 28, 2024, is one calendar day after the end of a maintenance period and thus is an interest payment date. Therefore, a depository institution’s account at the Federal Reserve Bank will be credited with their interest payment on Thursday, November 28, 2024.

   While the Federal Reserve Banks have adopted a seven-day accounting week, it is the sole discretion of financial institutions to determine how to handle transactional activities on non-standard business days.
    

6. Does the seven-day accounting week impact how interest on reserve balances is calculated?

   No. The method for calculating interest earned on balances held in a depository institution’s account has not changed. Interest on reserve balances is calculated by multiplying the End of Day balance in the account by the Interest on Reserve Balances (IORB) rate in effect for that day. The End of Day balance used in the interest calculation is in dollars and cents (no rounding). At the end of the maintenance period, the total interest for each day of the maintenance period is summed and paid.

   The interest calculation and interest payment detailed above includes interest earned for every calendar day of the maintenance period. In seven-day accounting week terms, the calculation occurs for the End of Day balance for every business day during the maintenance period, which includes standard business days and non-standard business days.

   So, if the balance in a financial institution’s account changes on a non-standard business day, then interest will be calculated on the End of Day balance for that non-standard business day and the interest earned will be included in the interest payment for that maintenance period.

Implementation of the FedNow Service

1. When was the FedNow Service implemented?

   The Federal Reserve System implemented the FedNow Service on Thursday, July 20, 2023. The FedNow Service is operational 24 hours a day, 7 days a week, 365 days a year.

2. What is the FedNow Service?

   The FedNow Service is a new instant payment infrastructure developed by the Federal Reserve that allows financial institutions of every size across the U.S. to provide safe and efficient instant payment services. The FedNow Service launched on Thursday, July 20, 2023.

   Through financial institutions participating in the FedNow Service, businesses and individuals can send and receive instant payments in real time, around the clock, every day of the year. Financial institutions and their service providers can use the service to provide innovative instant payment services to customers, and recipients will have full access to funds immediately, allowing for greater financial flexibility when making time-sensitive payments.

   The FedNow Service will provide reports to participating financial institutions and their correspondents to support transaction monitoring, account balance inquiries, reconciliation and other processes.

3. If a depository institution is not a participant in the FedNow Service, will the institution’s Reserve Account be affected by these changes?

   Yes. All depository institutions will be impacted whether a FedNow Service participant or not given the Federal Reserve’s accounting systems and the Reserves Central application were updated to support seven-day accounting activities.  If a depository institution does not participate in the FedNow Service, the institution’s account balance will remain unchanged on weekend days and in most instances the institution’s account balance will remain unchanged on holidays. However, the one change that will impact all institutions eligible for interest on reserve balances, whether or not the institution participates in the FedNow Service, is that interest payments will now always be credited to an institution’s account one calendar day after the end of a maintenance period, even if that day is a holiday.

4. With the Federal Reserve’s launch of the FedNow Service and a seven-day accounting week, is my bank required to implement a seven-day accounting week for Reserve Account administration?

   No. The Federal Reserve adopted a seven-day accounting regime to support the FedNow Service, but depository institutions are not required to do so.

Implementation of Interest on Reserve Balances (IORB) rate — Effective July 29, 2021

1. What is the Interest on Reserve Balances rate?

   The Interest on Reserve Balances (IORB) rate is the rate of interest paid by the Federal Reserve Bank on balances maintained by or on behalf of an eligible institution in an account at a Federal Reserve Bank. The interest rate is set by the Board of Governors as it is an important monetary policy tool.

2. When was the IORB rate established?

   The Board of Governors established an initial level of the IORB rate to be effective on Thursday, July 29, 2021. The Board of Governors votes on the level of the IORB rate at each FOMC meeting that is consistent with the announced monetary policy stance.

3. How is the IORB rate used in the calculation of interest on reserve balances?

   The amount of interest on reserve balances is calculated by multiplying the IORB rate on a day by the End of Day balance maintained in an account on that day. The End of Day balance used in the calculation will be the exact dollar amount in dollars and cents (no rounding).

   The formula for the interest calculation is:

   

   Where:

   • t is the day in the Maintenance Period (e.g., t = 3 on the third day of the MP)
   • IORB Rate is in decimal form (e.g., 1% is 0.01)
   • Interest is calculated down to dollars and cents
   • End of Day Balance is in dollars and cents, and per the max statement above, should be treated as zero if it is negative

   At the end of the maintenance period, the amount of interest earned for each day of that maintenance period will then be summed up and the total amount of interest for that maintenance period will be paid to the account holder. The interest payment will continue to be made to the account holder one business day after the end of the maintenance period.

Elimination of Reserve Requirements — Effective March 26, 2020

1. Why did the Federal Reserve reduce reserve requirement ratios to zero percent?

   For many years, reserve requirements played a central role in the implementation of monetary policy by creating a stable demand for reserves. In January 2019, the FOMC announced its intention to implement monetary policy in an ample reserves regime. Reserve requirements do not play a significant role in this operating framework.

   As announced (Off-site) on March 15, 2020, the Board reduced reserve requirement ratios to zero percent, effective March 26, 2020, in light of the shift to an ample reserves regime. This action eliminates the need for thousands of depository institutions to maintain balances in accounts at Reserve Banks to satisfy reserve requirements, thereby freeing up liquidity in the banking system to support lending to households and businesses.

2. What reserve requirement ratios did the Board reduce to zero percent?

   The Board reduced the reserve requirement ratios on net transaction accounts to zero percent effective March 26, 2020. Reserve requirement ratios on nonpersonal time deposits and Eurocurrency liabilities have been set to zero percent since 1990.

3. When did the change in reserve requirement ratios on net transaction accounts take effect?

   The change in reserve requirement ratios on net transaction accounts took effect with the maintenance period beginning March 26, 2020.

4. What was a reserve balance requirement?

   Prior to the reduction of reserve requirement ratios to zero percent, a reserve balance requirement was the portion of an institution’s reserve requirement that was not satisfied by its vault cash and therefore had to be maintained either directly with a Reserve Bank or in a pass-through arrangement with a correspondent institution.

   As announced (Off-site) on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions.

5. Do depository institutions’ balances in accounts at Reserve Banks continue to receive interest when reserve requirement ratios are set to zero percent?

   Yes, balances maintained by or on behalf of depository institutions in accounts at Reserve Banks continue to receive interest when reserve requirement ratios are set to zero percent. All balances earned the interest on excess reserves (IOER) rate through July 28, 2021. Thereafter, all balances earn the Interest on Reserve Balances (IORB) rate.

6. Is the elimination of reserve requirements permanent?

   Currently, the Board has no plans to re-impose reserve requirements. However, the Board may adjust reserve requirement ratios in the future if conditions warrant.

Deletion of Transfer Limit from Savings Deposit Definition — Announced April 24, 2020

1. What is the definition of a “savings deposit” in Regulation D?

   A “savings deposit” is a deposit or account, such as an account commonly known as a passbook savings account, a statement savings account, or as a money market deposit account (MMDA), that otherwise meets the requirements of §204.2(d)(1) and from which, under the terms of the deposit contract or by practice of the depository institution, the depositor may be permitted or authorized to make transfers and withdrawals to another account (including a transaction account) of the depositor at the same institution or to a third party, regardless of the number of such transfers and withdrawals or the manner in which such transfers and withdrawals are made.

2. Why did the Federal Reserve delete the numeric limits on certain kinds of transfers and withdrawals that can be made each month from the definition of a “savings deposit” in Regulation D?

   As a result of the elimination of reserve requirements on all transaction accounts, the retention of a regulatory distinction in Regulation D between reservable “transaction accounts” and non reservable “savings deposits” is no longer necessary. In addition, financial disruptions arising in connection with the novel coronavirus situation have caused many depositors to have a more urgent need for access to their funds by remote means, particularly in light of the closure of many depository institution branches and other in person facilities. Thus, the amendments to Regulation D are intended to allow depository institution customers more convenient access to their funds and to simplify account administration for depository institutions.

3. Are the recent amendments to Regulation D temporary or permanent?

   On April 24, 2020 (Off-site), the Board of Governors issued an interim final rule amending its Regulation D to delete the six-per-month limit on convenient transfers from “savings deposits.” The underlying reason enabling the changes in Regulation D is the Federal Open Market Committee’s (FOMC’s) choice of monetary policy framework of an ample reserve regime. In such a regime, reserve requirements are not needed. As a result, the distinction made by the transfer limit between reservable and non-reservable accounts is also not necessary. The FOMC’s choice of a monetary policy framework is not a short-term choice. The Board does not have plans to re-impose transfer limits but may make adjustments to the definition of savings accounts in the future, if conditions warrant.

4. Does the interim final rule require depository institutions to suspend enforcement of the six convenient transfer limit on accounts classified as “savings deposits”?

   No. The interim final rule permits depository institutions to suspend enforcement of the six transfer limit, but it does not require depository institutions to do so.

5. May depository institutions continue to report accounts as “savings deposits” on their FR 2900 reports even after they suspend enforcement of the six transfer limit on those accounts?

   Yes. Depository institutions may continue to report these accounts as “savings deposits” on their FR 2900 reports after they suspend enforcement of the six transfer limit on those accounts.

6. If a depository institution suspends enforcement of the six transfer limit on a “savings deposit,” may the depository institution report the account as a “transaction account” rather than as a “savings deposit”?

   Yes. If a depository institution suspends enforcement of the six transfer limit on a “savings deposit,” the depository institution may report that account as a “transaction account” on its FR 2900 reports. A depository institution may instead, if it chooses, continue to report the account as a “savings deposit.”

7. If a depository institution chooses to report an account where it has suspended enforcement of the six transfer limit as a “transaction account”, what type of transaction account would the account be?

   The type of “transaction account” for FR 2900 reporting purposes depends on the underlying characteristics of the account. If the depository institution does not retain the “reservation of right” provision set forth in section 204.2(d)(1) of Regulation D on the account, the account is a demand deposit. If the depository institution does retain the “reservation of right” provision on the account, then the account is a NOW account if the depositor is eligible to hold such an account or else it continues to be a savings deposit.

8. Does the interim final rule have any impact on the “reservation of right” provisions set forth in section 204.2(d)(1) of Regulation D?

   No. The interim final rule does not have any impact on section 204.2(d)(1) of Regulation D. The “reservation of right” continues to be a part of the definition of “savings deposit” under the interim final rule.

9. If a depository institution suspends enforcement of the six transfer limit on a “savings deposit,” is the depository institution required to change the way that interest on the account is calculated or reported?

   No. The interim final rule does not require a depository institution to change the way it calculates or reports interest on an account where the depository institution has suspended enforcement of the six transfer limit.

10. Suppose a depository institution has account agreements with its “savings deposit” customers that require the depository institution to enforce the six transfer limit. Suppose further that the depository institution would like to amend those account agreements so that the depository institution no longer has a contractual obligation to enforce the six transfer limit on its “savings deposit” accounts. Does the interim final rule require the depository institution to amend those agreements in any particular way?

    No. The interim final rule does not specify the manner in which depository institutions that choose to amend their account agreements may do so.

11. If a depository institution chooses to suspend enforcement of the six transfer limit on a “savings deposit,” must the depository institution change the name of the account or product if the account or product name has the words “savings” or “savings deposit” in it?

    No. The interim final rule does not require depository institutions to change the name of any accounts or products that have the words “savings” or “savings deposit” in the name of the account or product.

12. May depository institutions suspend enforcement of the six transfer limit on a temporary basis, such as for six months?

    Yes.

13. Suppose that a depository institution currently has policies or provisions in their savings deposit account agreements pursuant to which the depository institution charges fees to savings deposit customers for transfers and withdrawals that exceed the six transfer limit. May a depository institution that suspends enforcement of the six transfer limit continue to charge these fees when savings deposit customers make seven or more convenient transfers and withdrawals in a month?

    Regulation D does not require or prohibit depository institutions from charging their customers fees for transfers and withdrawals in violation of the six transfer limit. Accordingly, the deletion of the six transfer limit does not have a direct impact on the policies or account agreements of depository institutions that charge such fees to their customers.

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