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The Purpose and Use of the FR2900 Report

The Purpose and Use of the FR2900 Report. Gina Manco. Test your knowledge… 1.) How many Federal Reserve Banks exist?. Test your knowledge…. 2.) Who was President in 1913 when the Federal Reserve was created?. Woodrow Wilson. Test your knowledge….

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The Purpose and Use of the FR2900 Report

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  1. The Purpose and Use of the FR2900 Report Gina Manco

  2. Test your knowledge…1.) How many Federal Reserve Banks exist?

  3. Test your knowledge… 2.) Who was President in 1913 when the Federal Reserve was created? Woodrow Wilson

  4. Test your knowledge… 3.) What is the current target Fed Funds Rate? 1.5% (As of October 8, 2008)

  5. Questions to be addressed… • Why does the FR2900 report exist? • What is the purpose of FR2900 Report? • Where can the data be found? • Who is required to file the report? • When does panel determination occur?

  6. Why does the FR2900 exist? • A Brief History Lesson • Data collection for banks’ deposits began in 1929 • In 1966, reports combined and accelerated to weekly

  7. Why does the FR2900 exist? • Monetary Control Act of 1980 • Reserve requirements on all depository institutions (DIs) • Set the low-reserve tranche • $48.3 million in 2006 • Garn St. Germain Act of 1982 • Established an exemption amount • $7.8 million in 2006

  8. Why does the FR2900 exist? • Regulation D • The filing and collection of data is in compliance with Regulation D • Specifies the reserve ratios to be applied to an institution's reservable liabilities in order to determine the reserve requirement. • www.federalreserve.gov/regulations/default.htm#d

  9. What is the purpose of the FR2900? There are two main purposes for the FR2900 Report: • Calculation of required reserves • Construction of monetary aggregates Both used by the Board and the Federal Open Market Committee (FOMC) in the formulation of Monetary Policy.

  10. What is the purpose of the FR2900? • Calculation of Required Reserves • The following FR2900 line items are included in the calculation of Required Reserves • A1A – Demand Balances Due to DIs • A1B – Demand Balances Due to U.S. Government • A1C – Other Demand Deposits • A2 – ATS and NOW Accounts • AA1 – Ineligible Acceptances maturing in < 7 days • B1 – Demand Balances Due From DIs • B2 – Cash Items In Process

  11. What is the purpose of the FR2900? • Construction of monetary aggregates • M1 • Coins and currency • Demand deposits • NOW accounts • M2 • M1 • Savings deposits • Time deposits < $100,000 • Non-institutional money-market funds

  12. What is the purpose of the FR2900? • What is Monetary Policy? • Actions taken by the Federal Reserve to influence the terms and conditions under which money and credit are provided to the economy

  13. What is the purpose of the FR2900? • Three tools of Monetary Policy • Discount Rate - interest rate on loans from the discount window • Reserve requirements - amount of funds a DI must hold in reserve against specified deposit liabilities • Open Market Operations - purchases and sales of U.S. Treasury and federal agency securities

  14. What is the purpose of the FR2900? • Federal Reserve of New York Trading Desk • Open market operations • FOMC provides directive to Trading desk between meetings based on intended fed funds rate • Trades made daily to either purchase or sell U.S. Government securities in the open market, most often repurchase agreements

  15. Where can the data be found? • Publications • Federal Reserve Bulletin • Starting in 2006, published online as it becomes available • Statistical Releases • H.3, Aggregate Reserves of Depository Institutions and the Monetary Base • H.6, Money Stock Measures • Published each Thursday at 4:30 pm • www.federalreserve.gov/releases

  16. Board of Governors Reserves Regional Economic Analysis Flow of Data Federal Reserve Banks Processing/Analysis Money & Reserves Projections Federal Open Market Committee FRB NY - Open Market Desk Public - Statistical Releases

  17. Who is required to file the FR2900? • All depository institutions are subject to file; frequency is based on: • Net Transaction Accounts • NTA = A3+AA1–B1–B2 • Total Deposits

  18. Who is required to file the FR2900? • Non-Exempt • NTA > $7.8 million  subject to a Reserve Requirement • Exempt • NTA < $7.8 million  not subject to a Reserve Requirement

  19. Who is required to file the FR2900? 2006 Exemption levelsDeposits < $ 7.8MNTA < $ 7.8M (exempt)Deposits >$ 7.8M & < $ 1.206BNTA < $ 7.8M (exempt)Deposits < $ 229.1MNTA > $ 7.8M (non-exempt)Deposits >$ 229.1M & < $ 1.206BNTA > $ 7.8M (non-exempt)orDeposits >$ 1.206B

  20. When does panel determination occur? • Annually in July • FR 2900 weekly:Daily average data for each of the 13 report weeks ending with the last report week in June • FR 2900 quarterly:Daily average data for March and June report • FR 2910a:Data reported for the June report

  21. Final Exam Time!

  22. Final Exam • The Monetary Control Act of ______ allows the Fed to require reserves on all depository institutions. • 1970 • 1978 • 1980 • 1982

  23. Final Exam • lp • All of the below are tools of Monetary Policy except: • Open market operations • Discount rate • Reserve requirements • Woodrow Wilson

  24. Final Exam • lp • All of the below are tools of Monetary Policy except: • Net Transaction Accounts are calculated with which formula? • A3+AA1–B1–B2 • A3+C1+D1 • A2-AA1-B1-B2 • A3-B1-BB1

  25. Questions??

  26. Gina Manco, Sr. Financial Analyst • 216-579-2952 • gmanco@clev.frb.org

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