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Federal Reserve Statement
Source: Encyclopedia of Banking & Finance (9h Edition) by Charles
(We recommend this as work of authority.)
In accordance with Section
11 of the Federal Reserve Act, the Board of Governors of the Federal Reserve
System shall publish once each week a statement showing the condition
of each Federal Reserve bank and a consolidated statement for all Federal
Reserve banks. These statements
shall show in detail the assets and liabilities of the Federal Reserve
banks, singly and combined, and shall furnish full information regarding
the character of the money held as reserve and the amount, nature, and
maturities of the paper and other investments owned or held by Federal
Reserve banks. Pursuant to this requirement, the Consolidated Statement of
Condition of All Federal Reserve Banks, published weekly on Fridays based
on figures as of the close of business the preceding Wednesdays, includes
comparative figures on the 12 Federal Reserve banks combined, as well
as data on individual Federal Reserve banks, and also includes a maturity
distribution of loans and securities for the 12 banks combined.
In the same weekly
release of the board of governors (H.4.1) containing the Consolidated
Statement of Condition of All Federal Reserve Banks, the board also publishes
Factors Affecting Reserves of Depository Institutions.
These data afford an indication of the level of and factors affecting
reserves of depository institutions, Federal Reserve bank credit, and
related items, including estimates of the board as to required reserves
and EXCESS RESERVES at Federal Reserve banks.
balance sheet of the Federal Reserve Bank provides an accounting summary
of all phases of Federal Reserve Bank operations.
This balance sheet, also known as the statement of condition of
the Federal Reserve banks, is appended in a condensed form.
Major asset accounts
in the consolidated balance sheet includes the following:
certificate account. This
account represents warehouse receipts issued to the Reserve banks
by the Treasury against its gold holdings.
In return the Reserve banks issue an equal value of credits
to the Treasury deposit account. This amount represents the nation's entire official gold stock.
New gold certificates credits may be issued only if the Treasury
acquires additional gold or if the statutory price of gold is increased.
drawing rights certificate account.
This account reflects amounts created by the International
Monetary Fund to serve as a supplement to the international monetary
reserves of the members of the fund.
From time to time ESF monetizes SDRs by issuing SDR certificate
credits to the Reserve banks.
Coin represents only the amount of cons issued by the Treasury
that the Reserve banks hold.
The public obtains coin from depository institutions.
The amount of discount window credit extended by Federal Reserve
banks to depository institutions.
The proceeds of such loans are credited to the accounts of
depository institutions at the Federal Reserve.
Securities. This account comprises mainly U.S. government securities (Treasury
bills, notes, and bonds) and obligations of federal agencies, acquired
originally through open market operations.
items in process of collection.
Checks and other cash items that have been deposited with the
Reserve banks for collection on behalf of an institution having an
assets. This account consists of the value of Federal Reserve Bank
premises, interest accrued, Federal Reserve holdings of foreign currency,
and other items of minor importance.
accounts represented in the consolidated balance sheet include the following:
Reserve notes. The
principal type of U.S. currency in circulation.
of depository institutions.
Reserve balances and service-related balances of depository institutions.
Deposits of the U.S. Treasury represent amounts the Treasury
draws on these accounts to make payments by check or direct deposit
for all major types of federal spending.
Deposits of foreign central banks and governments are deposit
liabilities at the banks maintained with the Federal Reserve Bank of
New York. All the Reserve banks share in the deposit liability.
These deposits represent working balances held by foreign authorities
for purposes of international settlement.
Other deposit liabilities include deposit to some U.S. government
agencies and of international organization of which the U.S. is a member,
as well as miscellaneous deposits.
availability cash items. Such
items arise because Reserve banks do not give immediate credit to the
account of a depositing institution for all checks presented to the
Reserve banks for collection. The difference between the cash items in process of collection
account and the deferred availability cash items account is referred
to as Federal Reserve "float" and represents checks and other
items that although not yet collected by the Reserve banks, have already
been credited to the reserve balances of the institutions that deposited
them. Float measures the
amount of Federal Reserve credit granted to the deposits of depository
institutions that is generated by the Federal Reserve's involvement
in the National process of check collection.
liabilities and accrued dividends.
This item consists of unearned discounts, discounts on securities,
and miscellaneous accounts payable.
represented in the consolidated balance sheet include the following:
paid in. A bank that
is a member of the Federal Reserve System must subscribe to the capital
stock of the Reserve Bank of its district.
The total amount of the subscription is equal to 6% of the bank's
current capital stock and surplus.
Of this amount 3% is "capital paid in," and 3% is subject
to call by the Board of Governors.
These shares do not carry voting power to control the policies
of the Reserve banks. Member
institutions are entitled by statute to a cumulative dividend of 6%
per annum on the value of their paid-in stock.
Ownership of the stock many not be transferred, nor may the shares
be used as collateral for loans.
account. This account represents retained net earnings of the Reserve
capital accounts. This
item reflects the unallocated net earnings for the current year up to
the date of the statement. The
Reserve banks may draw on their surplus to meet deficits and to pay
dividends in years when operations result in loss.
Virtually all net earnings of Federal Reserve Banks over the
years have been paid to the U.S. Treasury.
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