Regulation I

DEFINITION of 'Regulation I'

A regulation set forth by the Federal Reserve. Regulation I stipulates that any bank that becomes a member of the Federal Reserve acquire a certain amount of stock in its Federal Reserve Bank. This regulation states the procedures for banks to purchase and redeem Federal Reserve Bank capital stock. The bank cannot use this stock as collateral.

BREAKING DOWN 'Regulation I'

Member banks are required to buy stock that equals at least 6% of their capital and surplus. Reserve Bank stock cannot be transferred to another party and pays dividends every six months. Banks must ensure that the ratio of the stock held to their capital and surplus remains constant at 6% or more at all times.

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