Federal Reserve Board Proposes Amendments to Regulation D that Would Enable the Establishment of a Term Deposit Facility

February 4, 2010

The Federal Reserve Board proposed on December 28, 2009 amendments to Regulation D (Reserve Requirements of Depository Institutions) that would enable the establishment of a term deposit facility. Under the proposal, the Federal Reserve Banks would offer interest-bearing term deposits to eligible institutions through an auction mechanism. 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.