Regulation D: Reserve Requirements And Transaction Accounts.pdf

Background:
Regulation D imposes reserve requirements on certain deposits and liabilities of depository institutions to support monetary policy. It categorizes deposit accounts for these purposes.

Types of Deposits Covered:
- Transaction Accounts: Demand deposits, NOW (negotiable order of withdrawal) accounts, and some time deposits are subject to reserve requirements. Excluded are 'nonpersonal time deposits' and 'Eurocurrency liabilities', which have had a zero percent requirement since the 1990s.

Transaction Accounts:
- Defined as accounts allowing unlimited transfers or withdrawals for payments to third parties, including by debit card.
- Include demand deposit accounts (maturity <7 days) and NOW accounts.
- Savings deposit accounts are explicitly excluded, even if they permit third-party transfers, unless transfer/withdrawal limits are followed.

Demand Deposit Accounts:
- No maturity period or original maturity >7 days.
- Payable on demand (or within 7 days' notice).
- May be interest-bearing.
- Include incorrectly classified deposits and matured time deposits.

NOW Accounts:
- Unlimited transactions, no maturity date.
- Institution must reserve the right to require 7 days' written notice of withdrawal.
- Permitted only for individuals, governmental units, and nonprofit organizations.
- Classified as transaction accounts.

Time Deposits:
- Maturity ≥7 days.
- Payable on specified date (not <7 days after deposit) or upon receipt of written notice (at least 7 days prior to withdrawal).
- Early withdrawal penalties apply if withdrawn within 6 days of deposit or partial withdrawal.
- Negotiable or nontransferable, represented by various forms.