Definition of Federal Reserve Banks

Federal Reserve Banks

The twelve district banks in the federal reserve System.

Federal Home Loan Banks

The institutions that regulate and lend to savings and loan associations. The
federal Home Loan banks play a role analogous to that played by the federal reserve banks vis-Ă -vis
member commercial banks.

Federal Reserve System

The central bank of the U.S., established in 1913, and governed by the federal
reserve Board located in Washington, D.C. The system includes 12 federal reserve banks and is authorized
to regulate monetary policy in the U.S. as well as to supervise federal reserve member banks, bank holding
companies, international operations of U.S.banks, and U.S.operations of foreign banks.

Reserve ratios

Specified percentages of deposits, established by the federal reserve Board, that banks must
keep in a non-interest-bearing account at one of the twelve federal reserve banks.

Consortium banks

A merchant banking subsidiary set up by several banks that may or may not be of the
same nationality. Consortium banks are common in the Euromarket and are active in loan syndication.

Excess reserves

Any excess of actual reserves above required reserves.

Federal agency securities

Securities issued by corporations and agencies created by the U.S. government,
such as the federal Home Loan Bank Board and Ginnie Mae.

Federal credit agencies

Agencies of the federal government set up to supply credit to various classes of
institutions and individuals, e.g. S&Ls, small business firms, students, farmers, and exporters.

Federal Deposit Insurance Corporation (FDIC)

A federal institution that insures bank deposits.

Federal Financing Bank

A federal institution that lends to a wide array of federal credit agencies funds it
obtains by borrowing from the U.S. Treasury.

Federal funds

Non-interest bearing deposits held in reserve for depository institutions at their district federal
reserve Bank. Also, excess reserves lent by banks to each other.

Federal funds market

The market where banks can borrow or lend reserves, allowing banks temporarily
short of their required reserves to borrow reserves from banks that have excess reserves.

Federal funds rate

This is the interest rate that banks with excess reserves at a federal reserve district bank
charge other banks that need overnight loans. The Fed Funds rate, as it is called, often points to the direction
of U.S. interest rates.

Federally related institutions

Arms of the federal government that are exempt from SEC registration and
whose securities are backed by the full faith and credit of the U.S. government (with the exception of the
Tennessee Valley Authority).

Freddie Mac (Federal Home Loan Mortgage Corporation)

A Congressionally chartered corporation that
purchases residential mortgages in the secondary market from S&Ls, banks, and mortgage bankers and
securitizes these mortgages for sale into the capital markets.

Free reserves

Excess reserves minus member bank borrowings at the Fed.

Money center banks

banks that raise most of their funds from the domestic and international money markets, relying less on depositors for funds.

Official reserves

Holdings of gold and foreign currencies by official monetary institutions.

Required reserves

The dollar amounts based on reserve ratios that banks are required to keep on deposit at a federal reserve Bank.

Reserve

An accounting entry that properly reflects the contingent liabilities.

Reserve currency

A foreign currency held by a central bank or monetary authority for the purposes of
exchange intervention and the settlement of inter-governmental claims.

Reserve requirements

The percentage of different types of deposits that member banks are required to hold
on deposit at the Fed.

Federal Reserve (the Fed)

The central bank in the United States, responsible for setting interest rates.

Excess Reserves

reserves of commercial banks in excess of those they are legally required to hold.

Federal Funds Rate

The interest rate at which banks lend deposits at the federal reserve to one another overnight.

Federal Open Market Committee (FOMC)

Fed committee that makes decisions about open-market operations.

Federal Reserve Board

Board of Governors of the federal reserve System.

Federal Reserve System

The central banking authority responsible for monetary policy in the United States.

Foreign Exchange Reserves

A fund containing the central bank's holdings of foreign currency or claims thereon.

Fractional Reserve Banking

A banking system in which banks hold only a fraction of their outstanding deposits in cash or on deposit with the central bank.

International Reserves

See foreign exchange reserves.

Legal Reserve Requirement

See reserve requirement.

Required Reserves

reserves that the central bank requires commercial banks to hold.

Reserve Currency

A currency, frequently the U.S. dollar, that is used by other countries to denominate the assets they hold as international reserves.

Reserve Ratio

See reserve requirement.

Reserve Requirement

Fraction of total deposits that a commercial bank is required by the central bank to hold in the form of reserves.

Reserves

Commercial banks' reserves consist of their holdings of cash and their balances in deposits with the central bank. See also foreign exchange reserves, excess reserves, required reserves, reserve requirement.

Electronic Federal Tax Payment Systems (EFTPS)

An electronic funds transfer system used by businesses to remit taxes to the government.

Federal Employer Identification Number

A unique identification number issued
by the federal government used for payroll purposes to identify the company
when it deals with the Internal Revenue Service.

Federal Insurance Contributions Act of 1935 (FICA)

A federal Act authorizing the government to collect Social Security and Medicare payroll taxes.

Federal Unemployment Tax Act (FUTA)

A federal Act requiring employers to pay a tax on the wages paid to their employees, which is then used to create a
pool of funds to be used for unemployment benefits.

Reserve Ratio

This calculation is used by states to determine the unemployment contribution rate to charge employers. The ongoing balance of a firm’s unclaimed
contributions from previous years is reduced by unemployment claims for the past year and then divided by the average annual payroll, resulting in a "reserve ratio".

Cookie Jar Reserves

An overly aggressive accrual of operating expenses and the creation of
liability accounts done in an effort to reduce future-year operating expenses.

Reserved material

Material that has been reserved for a specific purpose.

Bank for International Settlements (BIS)

An international bank headquartered in Basel, Switzerland, which
serves as a forum for monetary cooperation among several European central banks, the Bank of Japan, and the
U.S. federal reserve System. Founded in 1930 to handle the German payment of World War I reparations, it
now monitors and collects data on international banking activity and promulgates rules concerning
international bank regulation.

Edge corporations

Specialized banking institutions, authorized and chartered by the federal reserve Board
in the U.S., which are allowed to engage in transactions that have a foreign or international character. They
are not subject to any restrictions on interstate banking. Foreign banks operating in the U.S. are permitted to
organize and own and Edge corporation.

Discount Window

The federal reserve facility at which reserves are loaned to banks at the discount rate.

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