Authorizes the payment of interest by a Federal reserve bank at least quarterly on balances maintained there on behalf of a depository institution.
Amends the Federal Reserve Act to revise the ratio of reserves a depository institution must maintain against its transaction accounts, permitting a ratio of zero.
Directs the Federal Reserve banks in FY 2003 through 2007 to transfer to the Board for transfer to the Secretary of the Treasury, for deposit in the general fund, additional surplus funds equal to the net cost of their interest payments to depository institutions.