WASHINGTON -- In a recent comment letter on the latest round of amendments to the Federal Reserve's Regulation D, CUNA looked forward to a time when reserve requirements on transaction accounts would be zero.
"Before addressing the proposed amendments, CUNA would like to comment on a more general issue regarding reserve requirements," the association said in its March 28 letter. "Effective in 2011, the Federal Reserve Board is authorized to reduce reserve requirements on transaction accounts to zero. This is a very positive outcome given the fact that Regulation D reserves are not important for monetary policy purposes. In that connection, we urge the board to begin working with the financial institution sector now to transition to zero reserve requirements as soon as possible consistent with its statutory authority under the Financial Services Regulatory Relief Act of 2006."
Until that time, CUNA supported the amendments to the definition of savings deposit as they would make the withdrawal limitations less confusing for consumers and would facilitate the broader use of developing electronic payment technologies. CUNA asked the Fed to specify in its definition of savings deposit that permitting no more than six convenient withdrawals per month would not subject the account to reserve requirements.
--dmorrison@cutimes.com
