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Limits the Federal Reserve’s size and changes several Fed operations and reporting rules. It requires annual reports on interest paid to foreign-owned banks, directs the Fed to end the Overnight Reserve Repurchase Facility within one year, adds an asset cap for each Federal Reserve bank equal to no more than 10% of U.S. GDP (taking effect 10 years after enactment), and requires the Board to file an annual plan describing how it will comply with these changes.
The Board and each Federal reserve bank must submit to Congress, annually, a report on how many foreign-owned banks and financial institutions the Board or the Federal reserve banks have paid interest for reserves or in the Board’s lending facilities.
Amend section 19(b) (12 U.S.C. 461(b)), paragraph (2)(A), by striking specified text and inserting the phrase: ", which shall be not lower than the reserve requirements in effect on March 25, 2020."
Amend section 19(b) (12 U.S.C. 461(b)), paragraph (12)(A), by inserting after the text "; and" (text in the section indicates an insertion point).
Add a new section 33 that limits the total aggregate assets of all Federal reserve banks to an amount not more than 10 percent of the gross domestic product of the United States.
Subsection (a) (the 10% of GDP asset limit) takes effect 10 years after the date of enactment of this section.
Who is affected and how:
Board of Governors of the Federal Reserve System: Directly affected by new statutory constraints, new annual reporting duties, and the obligation to prepare and publish a plan showing how it will comply. The Board must redesign some operations and internal plans to meet deadlines.
Federal Reserve banks (proposed group): Face a legal ceiling on their allowed assets relative to U.S. GDP. Over the 10-year transition period they will need to adjust holdings, lending facilities, and operational practices to remain under the cap or seek structural workarounds.
Banks and other depository institutions: Could face changes in the availability and pricing of Fed services, reserve balances, and short-term liquidity depending on how the Fed reduces or reconfigures its balance sheet and eliminates the Overnight Reserve Repurchase Facility.
Foreign-owned banks / foreign persons: Will be the subject of a new annual disclosure on interest paid to them, increasing transparency and potentially public scrutiny of cross-border flows associated with Fed operations.
Money markets and short-term funding markets: Eliminating the Overnight Reserve Repurchase Facility removes a Fed tool that supports short-term liquidity. That could change market functioning, increase reliance on alternative facilities, or require market adjustments.
American consumers and the broader economy: Indirectly affected. Changes to Fed tools and balance-sheet size can affect interest rates, credit availability, and financial stability over time. The magnitude and direction of those effects depend on Fed policy choices during the transition.
Practical considerations:
The 10-year phase-in gives the Fed time to plan but does not eliminate the risk of disruptive adjustments if the Fed must materially shrink or change its balance sheet composition.
Annual reporting and public plans increase oversight and transparency but do not by themselves prescribe the technical methods the Fed must use to comply.
The combination of an asset cap and removal of a liquidity facility could constrain the Fed's operational flexibility during financial stress, unless alternative tools or statutory exceptions are created later.
Overall, the bill targets the central bank's size and certain tools directly, imposes transparency requirements about interest paid to foreign-owned banks, and sets deadlines that require the Fed to plan and adjust over time.
Adds a new subsection (d) to 12 U.S.C. 225b requiring the Board and each Federal reserve bank to submit an annual report to Congress on payments of interest to foreign-owned banks and financial institutions for reserves or in the Board's lending facilities.
Modifies statutory text in section 19(b) by replacing the trailing clause of paragraph (2)(A) with a clause setting a floor tied to reserve requirements in effect on March 25, 2020, and by inserting additional language into paragraph (12)(A).
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Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Introduced May 7, 2025 by Richard Lynn Scott · Last progress May 7, 2025
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Introduced in Senate