Foreign Exchange Operations

DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR Part 281

RIN 1510-AA48

Foreign Exchange Operations

AGENCY: Financial Management Service, Fiscal Service, Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This action proposes regulations to amend the administration

of the purchase, custody, deposit, transfer, sale and reporting of

foreign exchange (including credits and currencies) by executive

departments and agencies. The specific section being amended addresses

the limitation on the purchase of foreign exchange. Currently, foreign

exchange acquired by agencies shall be placed with accountable

officers. Unless otherwise authorized by the Secretary of the Treasury,

no accountable officer shall purchase foreign exchange which, together

with the balance on hand at the time of purchase, would exceed

estimated requirements for a 30 day period. This proposed revision

would restrict accountable officers to estimated requirements for a 5-7

business day period unless they have obtained a specific waiver of this

requirement from the Secretary of the Treasury.

DATES: Comments on this proposed rule must be received on or before

February 28, 1996.

ADDRESSES: All written comments on this proposed rule should be

addressed to Michael C. Salapka, Manager, International Funds Branch,

Financial Management Service, Prince George Metro Center II Building,

Room 5A19, 3700 East-West Highway, Hyattsville, MD 20782, or by FAX to

the attention of Bruce Riedl at (202) 874-8023.

FOR FURTHER INFORMATION CONTACT: Michael C. Salapka, (202) 874-8919,

(Manager, International Funds Branch); or Bruce Riedl, (202) 874-8918,

(Senior Advisor).

SUPPLEMENTAL INFORMATION:

Background

To protect the Government from risk, 31 CFR Sec. 281.7(c),

currently limits accountable officers to purchasing foreign exchange

only in an amount which, together with the balance on hand, does not

exceed the estimated requirements for a 30 day period. However, risk

reduction and improvements in cash management dictate that a shorter

time period be established. Specifically, in order to (1) minimize

local currency operating balances held in designated depositaries; (2)

minimize losses due to rate devaluations; and, (3) avoid premature

drawdowns on Treasury's General Account, all accountable officers shall

ensure that the amount of foreign exchange purchased with dollars,

together with the balance on hand, is commensurate with estimated

requirements for a 5-7 business day period. This will result in

interest savings to the Government. Further, balances in the local

currency operating account held at designated depositaries will be kept

as close to zero as possible without incurring overdrafts to the

account.

In certain situations, the administrative costs, local banking

regulations, or possible volume discounts appear to require maintaining

balances in excess of the 5-7 day amount. If circumstances require

exceeding this limit, the accountable officer must obtain a specific

waiver of this requirement from Treasury.

Rulemaking Analysis

This regulation is not a significant regulatory action as defined

in Executive Order 12866. Accordingly, a Regulatory Assessment is not

required. It is hereby certified pursuant to the Regulatory Flexibility

Act that this revision will not have a significant economic impact on a

substantial number of small entities. Accordingly, a Regulatory

Flexibility Act analysis is not required. This change primarily affects

executive departments and agencies.

List of Subjects in 31 CFR Part 281

Foreign exchange, banks, banking.

Accordingly, part 281 of title 31 is proposed to be amended as

follows:

[[Page 2751]]

PART 281--FOREIGN EXCHANGE OPERATIONS

1. The authority citation for part 281 is revised to read as

follows:

Authority: 22 U.S.C. 2363; 31 U.S.C. 3513; E.O. 10488, 18 FR

5699, 3 CFR 1949-1953, Comp., p. 972; E.O. 10900, 26 FR 143, 3 CFR

1959-1963, Comp., p. 429.

2. Section 281.7(c) is revised to read as follows:

Sec. 281.7 Limitations.

* * * * *

(c) Unless otherwise authorized by the Secretary, no accountable

officer shall purchase foreign exchange which, together with the

balance on hand at the time of purchase, would exceed estimated

requirements for a 5-7 business day period.

* * * * *

Dated: December 4, 1995.

Russell D. Morris,

Commissioner.

[FR Doc. 96-899 Filed 1-26-96; 8:45 am]

BILLING CODE 4810-35-P