[Federal Register Volume 63, Number 46 (Tuesday, March 10, 1998)]
[Notices]
[Pages 11683-11684]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-6137]
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FEDERAL RESERVE SYSTEM
[Docket No. R-0922]
Federal Reserve Uniform Cash Access Policy
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Policy statement.
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SUMMARY: The Board has revised its cash access policy to clarify the
base level of free currency access to all depository institutions in an
interstate branching environment. Each depository institution will be
able to designate up to ten endpoints to receive free currency access
from each Reserve Bank office. The revised policy provides flexibility
to depository institutions to make the most cost-effective arrangements
for obtaining cash services from Reserve Bank offices. The Board has
also delegated authority to the director of the Division of Reserve
Bank Operations and Payment Systems to interpret the cash access
policy.
EFFECTIVE DATE: May 4, 1998.
FOR FURTHER INFORMATION CONTACT: Jon J. Cameron, Manager (202/452-2220)
or Kathleen M. Connor, Senior Financial Services Analyst (202/452-
3917), Cash Section, Division of Reserve Bank Operations and Payment
Systems; for the hearing impaired only: Telecommunications Device for
the Deaf, Diane Jenkins (202/452-3544).
SUPPLEMENTARY INFORMATION:
I. Background
In April 1996, the Board approved a new cash access policy that
becomes effective on May 4, 1998 (61 FR 19062, April 30, 1996). The
policy provides greater consistency in Reserve Bank cash service levels
than currently exists. The policy provides for a base level of free
currency access to all depository institutions, but restricts the
number of offices served and the frequency of access. Depository
institution offices that meet minimum volume thresholds will be able to
obtain more frequent free access. Fees will be charged for additional
access beyond the free service level. The policy applies only to
currency deposits and orders, and does not include coin deposits and
orders.
Since approval of the policy, issues have arisen regarding
implementation in an interstate branching environment. The issues
relate to the definition of endpoints eligible for free access. The
April 1996 policy allowed each depository institution with a banking
presence in a Federal Reserve office territory to designate up to ten
offices to receive free cash access (deposit and order) from the local
Reserve Bank office (i.e., the Reserve Bank office in whose territory
the institution's office is located). Depository institutions asked
Reserve Bank offices whether they could receive cash services from non-
local Reserve Bank offices. It may be more economical for some
depository institutions to use a non-local Reserve Bank office. For
example, some depository institutions serve as correspondent banks for
respondent banks in other Federal Reserve territories. There also are
depository institutions that are geographically closer to non-local
Reserve Bank offices. In addition, depository institutions asked if an
automated teller machine (ATM) network or subset of a network could be
designated as an office to receive free cash access.
In order to address these issues, the Board has revised the April
1996 policy.
II. Discussion
The Board has revised its cash access policy within the following
framework: (1) the policy continues to provide consistency in the cash
service levels provided by Reserve Bank offices to depository
institutions; (2) the base level of free cash services continues to be
consistent with a wholesale role for the Reserve Banks, which implies
that a large depository institution is responsible for servicing its
own branch network; and (3) the policy provides flexibility to
depository institutions to make the most cost-effective arrangements
for obtaining cash services from Reserve Bank offices.
Under the revised policy, each depository institution can designate
up to ten endpoints to receive free cash access service from each
Reserve Bank office. A depository institution may not designate an
endpoint to receive free cash access from more than one Reserve Bank
office. A designated endpoint may be a branch, head office, a money
room and/or an armored carrier used by the depository institution to
provide cash. Individual ATM locations are not eligible for designation
as endpoints. If a depository institution uses an armored carrier to
service ATMs, the armored carrier may be designated as an endpoint.
Beyond the ten endpoints, Reserve Bank offices will continue to provide
free cash access to large endpoints whose volumes exceed a specified
threshold.
The revised policy provides flexibility to depository institutions
to make the most cost-effective arrangements for obtaining cash
services from Reserve Bank offices. For some depository institutions,
it may be more economical to use a non-local Reserve Bank office.
The Board continues to believe that implementation of the policy
will not materially affect the Reserve Banks' costs of providing cash
services. Aggregate cash receipts and disbursements are expected to
remain unchanged.
The Board has delegated authority to the director of the Division
of Reserve Bank Operations and Payment Systems to interpret the cash
access policy, and has permitted the director to further delegate this
authority to the Reserve Banks' Financial Services Policy Committee.
Other aspects of the policy remain unchanged.
III. Effective Date
The revised cash access policy becomes effective on May 4, 1998.
IV. Competitive Impact Analysis
The Board assesses the competitive impact of changes that may have
a substantial effect on payment system participants. In particular, the
Board assesses whether a proposed change would have a direct and
material adverse effect on the ability of other service providers to
compete effectively with the Federal Reserve Banks in providing similar
services and whether such effects are due to legal differences or due
to a dominant market position deriving from such legal differences.
It is highly unlikely that the revised policy will result in any
significant shift to Federal Reserve cash services away from private-
sector providers. Private-
[[Page 11684]]
sector providers offer an array of value-added cash services that the
Federal Reserve Bank offices do not provide. The revised policy also
clarifies that armored carriers may be designated as endpoints. The
Board's revised policy, therefore, does not adversely affect the
ability of depository institutions or service providers to compete with
the Federal Reserve Banks to provide cash services.
V. Federal Reserve Cash Service Access Policy
The Board has adopted the following Federal Reserve cash access
policy:
1. Number of endpoints eligible for free cash access. Each
depository institution can designate up to ten endpoints to receive
free cash access (deposit and order) service from each Reserve Bank
office. A depository institution may not designate an endpoint to
receive free cash access from more than one Reserve Bank office. A
designated endpoint may be a branch, head office, a money room and/or
an armored carrier used by the depository institution to provide cash
services. Individual ATM locations are not eligible for designation as
endpoints. If a depository institution uses an armored carrier to
service ATMs, the armored carrier may be designated as an endpoint.
Beyond the ten endpoints, Reserve Bank offices will provide free
cash access to endpoints whose volumes exceed a specified threshold.
Each Reserve Bank office will set a ``high bundle threshold,'' within
the range of fifty to one hundred bundles, to accommodate the needs of
the geographic area being serviced within that Federal Reserve office
territory. If a depository institution receives free access for more
than ten endpoints, each endpoint must meet the high bundle threshold.
2. Frequency of access. Normal free access for each designated
endpoint of the depository institution will be one deposit and one
order per week. Access more frequent than once per week will be
available free of charge to each designated endpoint whose volume
exceeds a twenty-bundle aggregate threshold and that satisfies the
local Reserve Bank office's denomination bundle standard.
3. Priced access. Reserve Bank offices may choose to accommodate
additional access where the demand exists subject to the constraints of
the physical facilities at each Reserve Bank office. Reserve Banks must
price access to cash services beyond the free service described above,
if offered.
4. Delegation of authority. The director of the Division of Reserve
Bank Operations and Payment Systems, under delegated authority, may (1)
approve changes in the base number of free endpoints and the volume
thresholds; (2) waive the policy for a limited period if warranted by
special circumstances, such as a natural disaster or the introduction
of new currency; and (3) interpret the cash access policy. The director
may further delegate this authority to interpret the policy to the
Federal Reserve Banks' Financial Services Policy Committee.
By order of the Board of Governors of the Federal Reserve
System, March 5, 1998.
William W. Wiles,
Secretary of the Board.
[FR Doc. 98-6137 Filed 3-9-98; 8:45 am]
BILLING CODE 6210-01-P