REGULATORY DEVELOPMENTS
EEOC RELEASES UPDATED COVID-19 VACCINE GUIDELINES FOR EMPLOYERS
On May 28, the EEOC updated and expanded its guidance about how federal equal employment opportunity laws may apply to potential employer requirements that employees be vaccinated against COVID-19 (the Guidance). For additional information regarding the Guidance, read the Goodwin client alert.
FED ISSUES FINAL RULE AMENDING REGULATION D WITH REGARD TO INTEREST ON RESERVE BALANCES
On June 2, the Federal Reserve announced the approval of a final rule amending Regulation D to eliminate references to an interest on required reserves rate and an interest on excess reserves rate, and to replace them with a single interest on reserve balances rate. The final rule also simplifies the formula used to calculate the amount of interest to be paid on such balances and makes other minor conforming amendments. The final rule adopts the rule proposed by the Federal Reserve on January 8, 2021 without change, and takes effect on Thursday, July 29, 2021.
FEDERAL RESERVE HINTS AT GOVERNMENT-BACKED CRYPTOCURRENCY
On May 24, 2021, Federal Reserve Governor Lael Brainard said during a CoinDesk virtual conference that “the Federal Reserve is stepping up its research and public engagement” on the possibility of a U.S. central bank digital currency. Brainard cited the need to understand the “benefits and risks” of such digital currencies in the United States before commenting that the Federal Reserve Board will publish a paper this summer outlining the Board’s “current thinking” on the subject. For additional information regarding a possible government backed Cryptocurrency, please read the latest edition of Goodwin’s Securities Snapshot.
“I do believe that in the context where we maintain the role of safe central bank money as a foundation for the payment system, there’s a lot of room for competition and innovation to flourish.”
– Lael Brainard, Federal Reserve Governor
FED ISSUES PROPOSAL AIMED AT IMPROVING INTRADAY LIQUIDITY MANAGEMENT
On May 28, the Federal Reserve requested comments on proposed changes to its payments system risk policy that would expand access to collateralized intraday credit from the Federal Reserve Banks. The proposal is aimed at improving intraday liquidity management and payment flows while assisting the reserve banks in managing intraday credit risk.
FEDERAL RESERVE INVITES PUBLIC COMMENT ON PROPOSED RULE TO GOVERN FUNDS TRANSFERS OVER FEDNOW SERVICE
On June 1, the Federal Reserve invited comment on a proposed rule to govern funds transfers over the Federal Reserve Banks' proposed FedNow℠ Service, a new payments service that will support instant payments in the United States and is expected to be available in 2023. The proposed rule would establish a new and comprehensive set of rules governing funds transfers over the FedNow Service and set out the legal rights and obligations of the Reserve Banks and FedNow Service participants. Many of the concepts in the proposed rule are similar to existing provisions that govern the Fedwire Funds Service, the payments service currently operated by the Federal Reserve.
FED ANNOUNCES PLANS TO BEGIN WINDING DOWN THE PORTFOLIO OF THE SECONDARY MARKET CORPORATE CREDIT FACILITY
On June 2, Federal Reserve announced plans to begin winding down the portfolio of the Secondary Market Corporate Credit Facility (SMCCF), a temporary emergency lending facility designed to support the availability of credit for large employers that closed on December 31, 2020. SMCCF portfolio sales will be gradual and orderly, and aim to minimize the potential for any adverse impact on market functioning by taking into account daily liquidity and trading conditions for exchange traded funds and corporate bonds. The Federal Reserve Bank of New York, which manages the operations of the SMCCF, will announce additional details soon before sales begin.
