To accommodate interstate branching and the Fed's new account structure, the Federal Reserve will issue new operating circulars for all of its services. The new circulars will be uniform across all Reserve Banks, making it easier for depository institutions who wish to conduct business in multiple Fed districts. The circulars will be distributed later this year and will take effect on Jan. 2, 1998.*
The standardization of operating circulars was prompted by recent changes affecting the banking industry, among them consolidation, technology and interstate banking. The new circulars will complement the account structure being implemented by the Fed in January. Under this structure, each separately chartered depository institution will be able to establish a single master account at a designated Reserve Bank and apply identical operating requirements for any Fed service, regardless of the Fed district in which that service is obtained. For customers with branches in multiple districts, these changes will render traditional geographical boundaries virtually obsolete.
For most institutions without interstate branches, the new circulars will not represent a significant change. Moreover, in most cases, existing agreements between customers and the Fed will remain valid; new agreements must be executed only for the circulars on lending and account relationships.
In the Eighth District, there are currently 22 operating circulars, or operating letters; this number will be reduced to 11 (see below). The circulars will be printed individually in booklet form and packaged in a three-ring binder. Accompanying the binder will be a summary of the changes contained in the new versions and a list of contacts at the St. Louis Fed who can respond to questions.
Customers will notice that the new circulars have been streamlined, with references to operating procedures, time schedules, deadlines, prices, etc. eliminated from the text. The Fed will communicate this type of information in other ways. Customers will also note that Circular No. 11 (Net Settlement) is missing from the binder. The Federal Reserve is planning changes to its net settlement service in 1998, and a new circular, for the revised service, will be issued at that time. In the interim, net settlement customers will receive amendments to existing agreements in a separate mailing. If you have questions about the new circulars, please contact Bernie Berns at (314) 444-8321.