The act substitutes the new Federal reserve banks for the banks in reserve and central reserve cities as the depositories of funds that may[9] be counted as a part of the reserves of member banks.

The new rule requires that one-third must be in the bank's own possession, a fraction slightly over a third must be in the Federal reserve bank, and the remainder may be kept in either place.

This may be tabulated as follows: _Not in In reserve In central reserve cities cities reserve cities_ Total reserves, per cent 12 15 18 Must be in its own vaults 4/12 5/15 6/18 May be either place 3/12 4/15 5/18 Must be in a Federal reserve bank 5/12 6/15 7/18 These requirements as to total reserves are, as compared with requirements of national banks under the old law, a reduction respectively of 20 per cent, 40 per cent, and 28 per cent.

The total decrease in the amount of reserves required for all three classes of national banks was about $400,000,000 on the amount of deposits held in September, 1914.
Sec.8.

#Rediscounts by Federal reserve banks.# More important than any other single feature of the act is, however, that by which each Federal reserve bank is to rediscount notes, drafts, and bills of exchange arising out of actual commercial transactions, when indorsed and presented by any of its member banks.