AUTHORIZATION FOR THE FEDERAL RESERVE TO PAY INTEREST ON RESERVES.

SEC. 201. AUTHORIZATION FOR THE FEDERAL RESERVE TO PAY INTEREST ON RESERVES.(a) In General.—Section 19(b) of the Federal Reserve Act (12 U.S.C. 461(b)) is amended by adding at the end the following:“(12) Earnings on balances.—“(A) In general.—Balances maintained at a Federal Reserve bank by or on behalf of a depository institution may receive earnings to be paid by the Federal Reserve bank at least once each calendar quarter, at a rate or rates not to exceed the general level of short-term interest rates.120 STAT. 1969“(B) Regulations relating to payments and distributions.—The Board may prescribe regulations concerning—“(i) the payment of earnings in accordance with this paragraph;“(ii) the distribution of such earnings to the depository institutions which maintain balances at such banks, or on whose behalf such balances are maintained; and“(iii) the responsibilities of depository institutions, Federal Home Loan Banks, and the National Credit Union Administration Central Liquidity Facility with respect to the crediting and distribution of earnings attributable to balances maintained, in accordance with subsection (c)(1)(A), in a Federal Reserve bank by any such entity on behalf of depository institutions.“(C) Depository institutions defined.—For purposes of this paragraph, the term ‘depository institution’, in addition to the institutions described in paragraph (1)(A), includes any trust company, corporation organized under section 25A or having an agreement with the Board under section 25, or any branch or agency of a foreign bank (as defined in section 1(b) of the International Banking Act of 1978).”.(b) Conforming Amendment.—Section 19 of the Federal Reserve Act (12 U.S.C. 461) is amended—(1) in subsection (b)(4)—(A) by striking subparagraph (C); and(B) by redesignating subparagraphs (D) and (E) as subparagraphs (C) and (D), respectively; and(2) in subsection (c)(1)(A), by striking “subsection (b)(4)(C)” and inserting “subsection (b)”.