WASHINGTON–The Federal Reserve Board yesterday proposed amendments to Regulation D (Reserve Requirements of Depository Institutions) that would enable the establishment of a term deposit facility–a move that could impact the corporate credit union system, according to one source.
Under the proposal, the Federal Reserve Banks would offer interest-bearing term deposits to eligible institutions via auction. “Term deposits would be one of several tools that the Federal Reserve could employ to drain reserves to support the effective implementation of monetary policy,” the Fed said.
This proposed rule change is one component of what the Fed calls “a process of prudent planning” and should not affect monetary policy decisions in the near term.
Comments will be accepted on the proposal for 30 days after publication in the Federal Register, which is expected shortly.
