In estimating reserves net balance of amounts due to and from other banks shall be basis for ascertaining the bank deposits against which reserves shall be determined.

Demand deposits are those payable within 30 days; time deposits those payable after 30 days and those subject to not less than 30 days' notice.

Reserves must be held as follows:

Country Banks

12% of demand and

5% of time deposits, of which

4/12 - In own vaults (for first 3 years 5/12).

5/12 - In Federal Reserve Bank of home district (2/12 for first year, and 1/12 for each succeeding 6 months up to 5/12.)

3/12 - In own vault or in Federal Reserve Bank (for 3 years this may be held in own vault, in Federal Reserve Bank, or with reserve agent as at present).

5/15 - In own vault (for first 3 years 6/15).

Reserve City

Banks

15% of demand and

5% of time deposits, of which

6/15 - In Federal Reserve Bank (3/15 for first year and 1/15 for each succeeding 6 months up to 6/15).

4/15 - In own vault and or in Federal Reserve Bank (for 3 years this may be held in own vault, in Federal Reserve Bank or in national banks in central reserve cities).

Central Reserve

City Banks

18% of demand and

5% of time deposits, of which

6/18 - In own vault.

7/18 - In Federal Reserve Bank.

5/18 - In own vault or Federal Reserve Bank.

Federal Reserve Banks may receive, as one-half of each installment or reserve, paper acceptable for rediscount.

Reserve funds in Federal Reserve Banks may be checked against to meet existing liabilities, but reserve must be restored before new loans or dividends can be made or declared.

Section in former law providing that 5 per cent redemption fund be considered part of reserve is repealed.

No Member Bank shall keep on deposit with a non-member bank more than 10 per cent of its own capital and surplus, except where State laws specify that reserves of State Banks shall or may be kept with State Institutions. Deposits so kept, for a period of three years after organization of Federal Reserve Bank of District, shall be considered as reserve deposits with proper reserve agent.

Refunding Of U. S. 2 Per Cent Bonds

At any time within twenty years after December 23rd, 1915, at the request of any Member Bank, the Federal Reserve Board may direct Federal Reserve Banks to purchase at par not to exceed $25,000,000 in any one year, Government 2 per cent bonds used to secure circulation, and circulation thereby secured shall be retired, but Federal Reserve Banks so purchasing may issue circulation as under present National Bank Act.

Any Federal Reserve Bank may exchange U. S. 2 per cent bonds for one-year 3 per cent U. S. gold notes in amount equal to one-half of amount of bonds exchanged, and thirty-year U. S. 3 per cent bonds without circulation privilege equal to remainder, provided such bank agrees to purchase for gold if so requested at the end of each year for thirty years, an amount of notes equal to the notes so received. Such notes on approval of Federal Reserve Board may be exchanged for U. S. 3 per cent thirty-year bonds.