When a U$.$S$.$ bank accepts a deposit from one of its foreign$$ branches, that deposit is subject to Fed reserve requirements.$$ Similarly, reserve requirements are imposed on any loan from a U$.$S$.$ bank's foreign branch to a U$.$S$.$ resident, or on any asset purchase by the branch bank from its U$.$S$.$ parent.

The rationale for these regulations is that

Part $2$

A$.$

foreign banks and their branches in U$.$S$.$ do not have an unfair advantage.

B$.$

all U$.$S$.$ banks are subject to the same reserve requirement that is important for bank solvency.

C$.$

foreign banks and U$.$S$.$ banks have a$$ "level playing$$ field."

D$.$

U$.$S$.$ banks without foreign branches have more options than those without foreign branches.