Payment Glossary - Anne & Lynn Wheeler

Fastpath

bank, check, clearing house, credit card, economics, exchange, Federal Reserve System, fiscal policy, float, foreign currency operations, interest, Internet, money, payment system, reserves, securities, settlement,

12L AADS ABMS ACH AMEX APR ASO ATMs ATS AVS BHC BIS BLS BOTCC CAC CADS CBCH CBT CCD CCH CD CETA CFTC CHECCS CHIPS CIE CIF CMB CME CNS CPI CRA CRA CRF CST CTP CTX CUSIP DCIA DIDC DM DTC DVP EAF-2 ECCHO ECHO ECP EDC EFAA EFT EFTA EFTS EMS EROC ERTA EST ET FAC FACS FCM FDIC FHLBB FOMC FRBC FRBM FRBNY FRBSF FTC GDP GNP GSCC IBF ICS ID IMF IRS MCA MICR MPC MPS MTE NACHA NASD NASDAQ NCUA NOCH NOW NPR NSCC NYACH NYCHA NYSE OCC OCC ODFI OFAC OPEC OTC OTS PAX Prenote PVP RCPC RDFI RTGS SDR's SEC SET S-HTTP SIAC S&L SRO SSL SWIFT TAP T-bills TIAC TLA UCC 4A UCC

Terms

ABA Number: A nine digit number (eight digits and a check digit) that identifies a specific financial institution. These numbers are assigned by the Thomson Financial Publishing and are listed in its annual publication Key to Routing and Transit Numbers. [ACH]
absolute advantage: A country has an absolute advantage if its output per unit of input of all goods and services produced is higher than that of another country. [FRBSF] A person, company or country has an absolute advantage if its output per unit of input of all goods and services produced is higher than that of another person, company or country. [FRBM] The ability of a producer to produce a higher absolute quantity of a good with the productive resource available. [FACS] (see also fiscal policy)
abundance: A term that applies when individuals can obtain all the goods they want without cost. If a good is abundant, it is free. [FACS] (see also fiscal policy)
academic consultants: An advisory group initiated by the board in the 1960's to provide a forum for the exchange of views between the Federal Reserve Board and members of the academic community in economics and banking. [FRBSF] (see also economics)
accelerator: The casual relationship between changes in consumption and changes in investment. [FACS] (see also fiscal policy)
account authority digital signature (AADS): relying party obtains public key from its own account registery record for digital signature authentication [misc] (see also public key infrastructure)
Account Balance Monitoring System (ABMS): Fedwire system allowing Reserve Banks to monitor depository institutions' account positions and payment activity on a real-time basis. Reserve Banks can hold or reject funds transfers that may cause account holders to exceed their net debit caps. [GAO] (see also bank, Fedwire)
accretion of discount: A straight-line accumulation of capital gains on discount bonds in anticipation of being paid par at maturity. [FRBSF]
ACH Association: An organization formed by financial institutions to regulate and support the exchange of electronic transactions among member institutions. [ACH] (see also automated clearinghouse)
ACH credit: A transaction through the ACH network originated to pay a receiver (deposit funds into an account). [ACH] (see also automated clearinghouse)
ACH debit: A transaction through the ACH network originated to remove funds from the receiver (withdrawal from account). [ACH] (see also automated clearinghouse)
ACH operator/processor: An ACH operator/processor is a central clearing facility that receives batches of ACH credit and debit transactions from originating depository institutions; edits, sorts, and distributes the transactions to receiving depository institutions; and facilitates the settlement among participants. [GAO] (see also automated clearinghouse, clearance)
acquiring processor: The processor provides credit card processing, billing, reporting and settlement and operational services to acquiring and issuing banks. Many financial institutions don't do their own bankcard processing because it's more cost-effective to let someone else invest in the equipment and people and do it for them. [GAO] (see also bank, credit card)
activist fiscal policy: Use of the federal governments taxing, spending and borrowing powers in order to stimulate economic growth and employment. [FACS] (see also economics, fiscal policy)
actual turnover: The number of times individuals actually spend their average money holding over a given period of time. Actual turnover is determined by the proportion of income that people receive and actually retain as money balances over a given period of time. [FACS]
addenda record: An ACH record type that carries the supplemental data needed to completely identify an account holder(s) or provide information concerning a payment to the Receiving Depository Financial Institution and the Receiver. [ACH] (see also automated clearinghouse)
additional settlement obligation (ASO): NYCHA loss-sharing arrangement to ensure that CHIPS settles even if a participant fails. Each CHIPS participant that has established bilateral limits with the failed participant agrees to assume an additional settlement obligcation equal to its pro rata share of the failed participan'ts net debit position. [GAO] (see also debt)
address verification service (AVS): AVS allows mail and telephone orders companies to verify a cardholder's billing address online. This program is designed to reduce fraudulent use of cardholder's credit card number [GAO] (see also credit card)
aggregate: Any total (e.g., the gross national product; the sum of monthly sales). [FRBSF]
agreement corporation: An Agreement corporation is a federally or state- chartered corporation that has entered into an agreement or understanding with the Board that it will not exercise any power that is impermissable for an Edge corporation. [FRBC] An agreement corporation is a federally or state-chartered corporation that has entered into an agreement or understanding with the Board that it will not exercise any power that is impermissible for an [FRBM] Corporation chartered by a state to engage in international banking; so named because the corporation enters into an 'agreement' with the Board of Governors to limit its activities to those permitted an Edge Act corporation. [FRBSF]
Amercian Express: (see also credit card company)
American Stock Exchange (AMEX)
amortization: The process of fully paying off indebtedness by installments of principal and earned interest over a definite time. [FRBC][FRBM][FRBSF] (see also debt, interest)
annual percentage rate (APR): The cost of credit on a yearly basis expressed as a percentage. [FRBC][FRBM][FRBSF] (see also debt)
ANSI X12: A communications format for electronic business data interchange established by the American National Standards Institute, a voluntary body supported by the American Bankers Association. [ACH]
antitrust laws: Designed to promote open markets by limiting practices that reduce competition. [FACS]
appraisal fee: The charge for estimating the value of property offered as security. [FRBC][FRBM][FRBSF]
assets: What a person or business owns. [FACS] (see also liabilities)
auction: The way price and interest are determined. [FRBSF]
authentication: Authentication is the process of verifying the identification of the true sender of a message and also that the text of the message itself has not been altered. [GAO] (see also public key infrastructure)
authorization: The act of insuring that the cardholder has adequate funds available against their line of credit. A positive authorization results in an authorization code being generated, and those funds being set aside. The cardholder's available credit limit is reduced by the authorized amount. [GAO] (see also credit card) (includes authorization agreement)
authorization agreement: A written agreement signed by an employee or customer to allow the posting of ACH transactions to their account. [ACH] (see also authorization)
automated clearinghouse (ACH): A computer-based clearing and settlement operation, often operated by a Federal Reserve Bank, established for the exchange of electronic transactions among participating depository institutions. Such electronic transactions can be substituted for paper checks used to make recurring payments such as payroll or preauthorized insurance premiums. The U.S. Treasury uses the ACH extensively to pay certain obligations of the government. [FRBC][FRBM] A service used by banks to exchange electronic payments drawn on one another. Total debits and credits (payments and deposits) and itemized accounting of individual items are presented. This reduces transportation expenses and simplifies the transfer of funds between customers accounts. [FRBC] An automated clearinghouse networks is an electronic batch processing system by which payment orders are exchanged among finanical institutions. [GAO] Electronic clearing and settlement system for exchanging electronic transactions among participating depository institutions; such electronic transactions are substitutes for paper checks and are typically used to make recurring payments such as payroll or loan payments. The Federal Reserve Banks operate an automated clearinghouse, as do some private-sector firms. [FRBSF] (see also addenda record, automated deposit, banking day, central information file, company, composite receivers' file, corporate trade exchange, corporate trade payment, customer, customer initiated entry, day cycle, descriptive statement, direct debit, direct deposit, effective entry date, electronic funds transfer, file header, intercept point, loan, machine transfer entry, memo posting, on-us entries, originating company, originating depository financial institution, originating depository institution, originator, participating depository financial institution, payment system, prenotification, receiver, receiving depository financial institution, receiving point, remake, return item, reversing entry, trace number, transit routing number, warehousing, clearing house, settlement) (includes ACH Association, ACH credit, ACH debit, ACH operator/processor, National Automated Clearinghouse Association, New York Automated Clearinghouse, Private ACH Exchange, interregional exchange, intraregional exchange)
automated deposit: A deposit made directly to an account at a depository institution through the ACH network (i.e., payroll deposits, social security payments, and retirement benefits). [ACH] (see also automated clearinghouse)
Automated Teller Machines (ATMs): A computer terminal to dispense cash, accept deposits and loan payments, and enable a financial institution's customer to order transfers among accounts and make account inquiries. [ACH] A machine used for banking services, including withdrawals and deposits, balance inquiries, transfers, and other services. Customers access an ATM by using a plastic card encoded with electromagnetic identification such as an access card or credit card. Transactions are processed electronically with the aid of computer systems. [FRBC] Computer-controlled terminals located on the premises of financial institutions or elsewhere, through which customers may make deposits, withdrawals, or other transactions as they would through a bank teller. Other terms sometimes used to describe such terminals are customer-bank communications terminal (CBCT) and remote service unit (RSU). Groups of banks sometimes share ATM networks located throughout a region of the country that may include portions of several states. [FRBC][FRBM][FRBSF] (see also bank, debit card, loan)
automatic payment: A service allowing customers to authorize their bank to make regular transfers for certain expenses (such as mortgage, insurance premiums, utilities, etc.) from their checking or savings account. [FRBC]
automatic stabilizers: Measures built into the governments budget that cause its spending to increase and its tax revenues to decrease when the economy goes into slumps, and that cause government expenditures to decrease and taxes to increase when the economy goes into booms. [FACS] (see also fiscal policy)
automatic transfer service (ATS): (includes automatic transfer service account)
automatic transfer service account: A depositor's savings account from which funds may be transferred automatically to the same depositor's checking account to cover a check written or to maintain a minimum balance. [FRBC][FRBM][FRBSF] (see also automatic transfer services account, automatic transfer service, check)
automatic transfer services account: A depositor's savings account from which funds may be transferred automatically to the same depositor's checking account to cover a check written or to maintain a minimum balance. [FRBC][FRBM][FRBSF] (see also automatic transfer service account)
back office: The back office of a financial institution is made up of employees responsible for (1) recording and maintaining the official records of the financial institutions and (2) processing transactions entered into by the financial institutions or its customers. [GAO]
balance of payments: A record of all the financial transactions between a country and the rest of the world during a given year. [FACS] An accounting statement of the money value of international transactions between one nation and the rest of the world over a specific time period. The statement shows the sum of transactions of individuals, businesses and government agencies located in one nation, against those of all other nations. [FRBM][FRBSF] (see also balance of trade)
balance of trade: That part of a nation's balance of payments dealing with imports and exports, that is trade in goods and services, over a given period. If exports of goods exceed imports, the trade balance is said to be 'favorable'; if imports exceed exports, the trade balance if said to be 'unfavorable.' [FRBM][FRBSF] (see also balance of payments)
balloon payment: A large extra payment that may be charged at the end of a loan or lease. [FRBC][FRBM][FRBSF] (see also loan, interest payments)
bank: (see also Account Balance Monitoring System, Automated Teller Machines, Community Reinvestment Act, Depository Institutions Deregulation Committee, Electronic Money System, Eurodollars, Federal Advisory Council, Federal Deposit Insurance Corporation, Federal Open Market Committee, Federal Reserve System, International Banking Facility, Monetary Control Act of 1980, Office of the Comptroller of the Currency, Open Market Operations, Repurchase Agreements, Society for Worldwide Interbank Financial Telecommunication, Thrift Institutions Advisory Council, acquiring processor, bank holding company, bank note, bank panic, bank regulation, bank reserves, bank run, bank supervision, bankers acceptance, banking day, bankwire, central bank intervention, certificate of deposit, check, clearing house, credit card, credit deposit, credit line, daylight overdraft, demand deposit, deposit ceiling rates of interest, descriptive statement, discount rate, electronic banking, fiscal agency services, float, netting member, permissible nonbank activities, presentment fee, required reserves, settlement, short-term interest rates, small saver certificate) (includes Bundesbank, Federal Reserve Bank, Thrift Institutions, central bank, clearing agent bank, commercial bank, correspondent bank, depositary bank, depository institution, issuer, lender of last resort, member bank, mutual savings banks, nonmember bank, nonmember depository institution, paying bank, respondent bank, savings bank, settlement bank, state member bank)
Bank for International Settlements (BIS): The BIS, located in Basle, Switzerland, was established in 1930 to administer the post-World War I reparations agreements. Since the 1960s, the BIS has evolved into an important international monetary institution, and has provided a forum in which central bankers meet and consult on a monthly basis. As an independent financial organization, the BIS performs a variety of banking, trustee, and agent functions, primarily with central banks. [FRBM][FRBSF] The BIS, located in Basle, Switzerland, was established in 1930 to administer the post-World War I reparations agreements. Since the 1960s, the BIS has evolved into an important international monetary institution, and has provided a forum in which central bankers meet and consult on a monthly basis. As an independent financial organization, the BIS performs a variety of banking, trustee, and agent functions, primarily with central banks. At present the BIS has 29 members, 28 of which are central banks. The Federal Reserve is represented at BIS meetings, but is not a member. The BIS is the only international financial institution in which most Eastern European countries are members. The Soviet Union, East Germany, and Albania, however, are not members. [FRBC] (see also foreign currency operations, settlement bank)
bank holding company (BHC): A company that owns or controls one or more banks. The Board of Governors has responsibility for regulating and supervising bank holding companies, such as approving acquisitions and mergers and inspecting the operations of such companies. This authority applies even though a bank owned by a holding company may be under the primary supervision of the Comptroller of the Currency or the FDIC. [FRBM] A company that owns or controls one or more banks. The Board of Governors has responsibility for regulating and supervising bankholding companies, such as approving acquisitions and mergers and inspecting the operations of such companies. This authority applies even though a bankowned by a holding company may be under the primary supervision of the Comptroller of the Currency or the FDIC. [FRBC] Company that owns, or has controlling interest in, one or more banks. A company that owns more than one bank is known as a multibank holding company. (A bank holding company may also own another bank holding company, which in turn owns or controls a bank; the company at the top of the ownership chain is called the top holder.) The Board of Governors is responsible for regulating and supervising bank holding companies, even if the bank owned by the holding company is under the primary supervision of a different federal agency (the Comptroller of the Currency or the Federal Deposit Insurance Corporation). [FRBSF] (see also bank) (includes permissible nonbank activities)
bank note: A term used synonymously with paper money or currency issued by a bank. Notes are, in effect, a promise to pay the bearer on demand the amount stated on the face of the note. Today, only the Federal Reserve Banks are authorized to issue bank notes, i.e. Federal Reserve notes, in the United States. [FRBM][FRBSF] (see also bank)
bank panic: (see bank run) (see also bank)
bank regulation: The formulation and issuance by authorized agencies of specific rules or regulations, under governing law, for the conduct and structure of banking. [FRBC][FRBM][FRBSF] (see also bank, bank supervision)
bank reserves: The total quantity of Federal Reserve notes held in bank vaults or checkable deposits held by the banks at the Fed district banks. [FACS] (see also bank, reserves)
bank run: A series of unexpected cash withdrawals caused by a sudden decline in depositor confidence or fear that the bank will be closed by the chartering agency, i.e. many depositors withdraw cash almost simultaneously. Since the cash reserve a bank keeps on hand is only a small fraction of its deposits, a large number of withdrawals in a short period of time can deplete available cash and force the bank to close and possibly go out of business. [FRBM][FRBSF] (see also bank)
bank supervision: Concern of financial regulators with the safety and soundness of individual banks, involving the general and continuous oversight of the activities of this industry to ensure that banks are operated prudently and in accordance with applicable statutes and regulations. [FRBC][FRBM] Oversight of individual banks to ensure that they are operated prudently and in accordance with applicable statutes and regulations. [FRBSF] (see also Federal Deposit Insurance Corporation, Federal Reserve System, National Credit Union Administration, Office of Thrift Supervision, Office of the Comptroller of the Currency, bank, bank regulation)
bankers acceptance: Bankers acceptances are negotiable time drafts, or bills of exchange, that have been accepted by a bank which, by accepting, assumes the obligation to pay the holder of the draft the face amount of the instrument on the maturity date specified. They are used primarily to finance the export, import, shipment, or storage of goods. [FRBC][FRBM][FRBSF] (see also bank)
banking day: Any day on which a participating financial institution is open to the public during any part of the day for carrying on substantially all its financial functions. With reference to an automated clearinghouse, any day on which the appropriate facility of the clearing house is being operated. [ACH] (see also automated clearinghouse, bank)
bankwire: An electronic communications network owned by an association of banks and used to transfer messages between subscribing banks. Bankwire also offers a clearing service called Cashwire that includes a settlement facility. [FRBC][FRBSF] (see also bank)
batch: A group of records or documents considered as a single unit for the purpose of data processing. [ACH]
batch processing: Batch processing is the transmission or processing of a group of payment orders and/or securities transfer instructions. [GAO]
benefits in kind: Noncash forms of pay or assistance. [FACS]
Board of Governors: Central, governmental agency of the Federal Reserve System, located in Washington, DC, and composed of seven members who are appointed by the President and confirmed by the Senate. The Board is responsible for domestic and international economic analysis; with other components of the System, for the conduct of monetary policy; for supervision and regulation of certain banking organizations; for operation of much of the nation's payments system; and for administration of most of the nation's laws that protect consumers in credit transactions. [FRBSF] Governmental agency of the Federal Reserve System, located in Washington, DC, and composed of seven members who are appointed by the President and confirmed by the Senate. The Board is responsible for domestic and international economic analysis; with other components of the System, for the conduct of monetary policy; for supervision and regulation of certain banking organizations; for operation of much of the nation's payments system; and for administration of most of the nation's laws that protect consumers in credit transactions. [FRBM] (see also economics, Federal Reserve System)
Board of Trade Clearing Corporation (BOTCC)
bond: A bond is a debt security representing a loan by the buyer to the corporation or government issuing the bond; it may pay interest, or it may be discounted in price from the value at maturity. [GAO] (see also debt, loan)
book-entry: One form in which Treasury and certain government agency securities are held. Book-entry form consists of an entry on the records of the U.S. Treasury Department, a Federal Reserve Bank, or a financial institution. [FRBC][FRBM]
book-entry securities: Securities that are recorded in electronic records, called book entries, rather than as paper certificates. Ownership of U.S. government book-entry securities is transferred over Fedwire. [FRBSF] (see also securities)
book-entry system: A book-entry system is an accounting system that permits the transfer of assets (e.g., securities) without the physical movement of paper documents or certificates. [GAO]
bracket creep: The process by which inflation drives personal incomes upward into higher tax brackets. In a progressive income tax system, this causes an increase in tax burdens. [FACS] (see also fiscal policy)
Bretton Woods: An international monetary system operating from 1946-1973. The value of the dollar was fixed in terms of gold, and every other country held its currency at a fixed exchange rate against the dollar; when trade deficits occurred, the central bank of the deficit country financed the deficit with its reserves of international currencies. [FACS] (see also fiscal policy, reserves)
broker-dealer: Any person, other than a bank, engaged in the business of buying or selling securities on its own behalf or for others. [FRBC][FRBM][FRBSF] (see also securities)
brokers' loans: Money borrowed by brokers from banks for uses such as financing specialists' inventories of stock, financing the underwriting of new issues of corporate and municipal securities, and financing customer margin accounts. [FRBC][FRBM] Money borrowed by brokers from banks for uses such as financing specialists' inventories of stock, the underwriting of new issues of corporate and municipal securities, and customer margin accounts. [FRBSF] (see also loan)
browser: A browser is a computer program that facilitates locating and displaying information on the World Wide Web (e.g., Netscape Navigator or Microsoft Explorer). The browser could work on the Internet or through internal information management systems called Intranets. [GAO] (see also Internet)
Bundesbank: Established in 1875, the central bank of West Germany, located in Frankfurt. [FRBSF] (see also bank)
Bureau of Labor Statistics (BLS): A research agency of the U.S. Department of Labor; it compiles statistics on hours of work, average hourly earnings, employment and unemployment, consumer prices, and many other variables. [FRBSF] (see also fiscal policy)
business cycles: Periodic swings in the pace of national economic activity, characterized by alternating expansion and contraction phases. [FACS] (see also economics)
buydown: A lump sum payment made to the creditor by the borrower or by a third party to reduce the amount of some or all of the consumer's periodic payments to repay the indebtedness. [FRBC][FRBM][FRBSF] (see also debt)
California Bankers Clearing House (CBCH): CBCH provides check exchange services to over 100 depository institutions located mainly in California [GAO] (see also clearing house)
call option: A call option is a contract that gives one the right, but not the obligation, to buy a specified amount of an underlying asset, such as stocks or currency, at a specified price by a certain date. [GAO] (see also option)
capacity utilization rate: The percentage of the economy's total plant and equipment that is currently in production. Usually a decrease in this percentage signals an economic slowdown, while an increase signals economic expansion. [FRBSF] (see also economics)
capital: The existing stock of productive resources, such as machines and buildings, that have been produced. [FACS] (see also fiscal policy)
capital intensive: Production methods with a high quantity of capital per worker. [FACS] (see also fiscal policy)
capital market: The market in which corporate equity and longer-term debt securities (those maturing in more than one year) are issued and traded. [FRBC][FRBM][FRBSF] (see also debt, securities)
capital market rates: (see long-term interest rates)
capitalist economies: Economies which use market-determined prices to guide peoples choices about the production and distribution of goods; these economies generally have productive resource which are privately owned. [FACS] (see also fiscal policy)
capture: Converting the credit card authorization amount into a billable transaction record within a batch. Transactions cannot be captured unless previously authorized, and authorizations cannot be captured until the goods or services have been shipped or transmitted to the consumer. [GAO] (see also credit card)
cash concentration and disbursement (CCD): A format for ACH payments. [ACH] (see also money)
cash letter: A cash letter is a group of checks, accompanied by a listing of the checks, which is sent to a clearing house, a correspondent bank, or the Federal Reserve for collection. [GAO] (see also check, money)
Cash Management Bill (CMB): Very-short-maturity bills that the Treasury sells on an irregular basis to bridge low points in the Treasury's cash balance. [FRBSF] (see also money)
cash method of accounting: A system, used especially in computing income tax, in which income is not credited until it is actually or constructively received and expenses are not charged until they have been paid; to be distinguished from the accrual method, in which income is credited when the legal right to the income occurs and expenses are charged when the legal liability becomes enforceable. [FRBSF] (see also money)
cease-and-desist order: An order issued after notice and opportunity for hearing, requiring a depository institution, a holding company, or a depository institution official to terminate unlawful, unsafe, or unsound banking practices. Cease-and-desist orders are issued by the appropriate federal regulatory agencies under the Financial Institutions Supervisory Act and can be enforced directly by the courts. [FRBC][FRBM][FRBSF]
central bank: Principal monetary authority of a nation, which performs several key functions, including issuing currency and regulating the supply of credit in the economy. The Federal Reserve is the central bank of the United States. [FRBC] The principal monetary authority of a nation, a central bank performs several key functions, including issuing currency and regulating the supply of credit in the economy. The Federal Reserve is the central bank of the United States. [FRBM][FRBSF] (see also bank)
central bank intervention: In order to influence market conditions or exchange rate movements, central banks buy or sell their currency or the currency of other countries. [FRBM] Influence on exchange rates in the foreign exchange market when exchange rates are not fixed by law; i.e., a central bank buys its countrys currency with foreign currencies to drive its currency up in value; to drive it down, a central bank sells its currencies in return for foreign currencies. [FACS] The buying or selling of currency, foreign or domestic, by central banks, in order to influence market conditions or exchange rate movements. [FRBSF] (see also bank, fiscal policy)
central information file (CIF): A master file maintained by the ACH containing information on each depository financial institution. This file includes the depository financial institution's name, transit routing number, address, settlement and delivery information and output medium requested. [ACH] (see also automated clearinghouse)
central standard time (CST)
certificate of deposit (CD): A form of time deposit at a bank or savings institution which cannot be withdrawn before a specified maturity date without being subject to an interest penalty for early withdrawal. Small-denomination CDs are often purchased by individuals. Large CDs of $100,000 or more are often in negotiable form, meaning they can be sold or transferred among holders before maturity. [FRBSF] A form of time deposit at a bank or savings institution; a time deposit cannot be withdrawn before a specified maturity date without being subject to an interest penalty for early withdrawal. Small-denomination CDs are often purchased by individuals. Large CDs of $100,000 or more are often in negotiable form, meaning they can be sold or transferred among holders before maturity. [FRBC][FRBM] (see also bank, interest)
certification authority digital signature (CADS): relying party uses certificate manufactored by a certification authority to obtain the public key for digital signature authentication [misc] (see also public key infrastructure)
change in demand: A shift in the entire demand curve so that at any given price, people will want to buy a different amount. A change in demand is caused by some change other than a change in the goods price. [FACS] (see also fiscal policy)
change in quantity demanded: Movement up or down a given demand curve caused by a change in the goods price with no shift in the curve itself. [FACS] (see also fiscal policy)
change in quantity supplied: A price change causing movement along the supply curve but no shift in the position of the curve itself. [FACS] (see also fiscal policy)
change in supply: A change in one of the cost determinants of supply causing a shift in the position of the supply curve. [FACS] (see also fiscal policy)
chargeback: A credit card purchase disputed by the credit cardholder and the amount of the transaction is subsequently 'charged back' to the merchant. [misc] (see also return item, credit card)
check: A check is a written order from one party (the payor) to another party (the payee) requiring the payor to pay a specified sum on demand to the payee or to a third party specified by the payee. [GAO] (see also Federal Reserve float, MICR-line information, bank, cash letter, correspondent bank, debit card, depositary bank, float, paying bank, presentment fee, respondent bank, payment system) (includes Electronic Check Clearing House Organization, Negotiable Order of Withdrawal account, automatic transfer service account, check clearing, check truncation, demand deposit, electronic check presentment, on-us check, overdraft checking account, regional check processing center)
check clearing: Check clearing is the movement of a check from the depository institution at which it was deposited back to the institution on which it was written. The funds move in the opposite direction, with a corresponding credit and debit to the involved accounts. [GAO] The movement of checks from the banks or other depository institutions where they are deposited back to those on which they are written, and funds movement in the opposite direction. This process results in credits to accounts at the institutions of deposit and corresponding debits to the accounts at the paying institutions. The Federal Reserve participates in check clearing through its nationwide facilities, though many checks are cleared by private sector arrangement. [FRBC] The movement of checks from the banks or other depository institutions where they are deposited back to those on which they are written, and funds movement in the opposite direction. This process results in credits to the accounts at the institutions of deposit and corresponding debits to the accounts at the paying institutions. The Federal Reserve participates in check clearing through its nationwide facilities, though many checks are cleared by private sector arrangement. [FRBM][FRBSF] (see also check)
check truncation: Check truncation is the practice of holding a paper check at the bank at which it was deposited (or at an intermediary bank) and electronically forwarding the essential information on the check to the bank on which it was written. A truncated check is not returned to the writer. [GAO] (see also check)
Chicago Board of Trade (CBT)
Chicago Clearing House Association (CCH): CCH provides check exchange services to its 8 member banks and its 260 affiliate members. [GAO] (see also clearing house)
Chicago Mercantile Exchange (CME)
choice: The act of selecting among alternatives, a concept crucial to economics. [FACS] (see also economics)
civilian labor force: All persons over the age of sixteen who are not in the armed forces nor institutionalized and who are either employed or unemployed. [FACS] (see also fiscal policy)
class of options: A class of options consists of options that are of the same type and style and cover the same underlying asset. [GAO] (see also option)
clearance: Clearance is the process of transmitting, reconciling, and in some cases, confirming payment orders or security transfer instructions prior to settlement, possibly including the netting of instructions and the establishment of final positions for settlement. In the context of securities markets, this process is often referred to as clearance. [GAO] (includes ACH operator/processor, clearing agent bank, clearing house, clearing members, comparison member)
clearing agent bank: Clearing agent banks are Fedwire participants that are regularly engaged in the business of providing clearing services in eligible securities for members and GSCC. [GAO] (see also Fedwire, Government Securities Clearing Corporation, bank, clearance) (includes comparison member)
clearing house: A clearing house is a voluntary association of depository institutions that facilitates the exchange of payment transactions such as checks, automated clearinghouse transactions, and large-value funds transfers and the settlement of participants' net debit or credit positions. [GAO] An institution where mutual claims are settled between accounts of member depository institutions. Clearinghouses among banks have traditionally been organized for check-clearing purposes, but more recently have cleared other types of settlements, including electronic fund transfers. [FRBC][FRBM][FRBSF] (see also bank, clearance, payment system, settlement) (includes California Bankers Clearing House, Chicago Clearing House Association, Clearing House Interbank Payment System, Electronic Check Clearing House Organization, Exchange Clearing House, Government Securities Clearing Corporation, National Automated Clearinghouse Association, National Securities Clearing Corporation, New York Clearing House Association, Options Clearing Corporation, automated clearinghouse)
Clearing House Electronic Check Clearing System (CHECCS)
Clearing House Interbank Payment System (CHIPS): An automated clearing system used primarily for international payments. This system is owned and operated by the New York Clearinghouse banks and engages Fedwire for settlement. [FRBSF] CHIPS is a private-sector electronic funds transfer system run by the New York Clearing House Association (NYCHA) [GAO] (see also New York Automated Clearinghouse, clearing house) (includes Office of Foreign Assets Control)
clearing members: Clearing members are firms that are determined by OCC to be qualified to interact with OCC on behalf of market participants. [GAO] (see also Options Clearing Corporation, clearance)
Clearinghouse Interbank Payments System: An automated clearing system used primarily for international payments. This system is owned and operated by the New York Clearinghouse banks. It engages Fedwire for settlement. [FRBC][FRBM]
closed-end credit: An agreement in which advanced credit, plus any finance charges, are expected to be repaid in full over a definite time. Most real estate and automobile loans are closed-end agreements. [FRBSF] Generally, any loan or credit sale agreement in which the amounts advanced, plus any finance charges, are expected to be repaid in full over a definite time. Most real estate and automobile loans are closed-end agreements. [FRBC][FRBM] (see also loan)
collateral: Property that is offered to secure a loan or other credit and that becomes subject to seizure on default. (Also called security.) [FRBC] Property that is offered to secure a loan or other credit and that becomes subject to seizure on default. (also called security) [FRBM][FRBSF] (see also loan)
commercial bank: Bank that offers a broad range of deposit accounts, including checking, savings, and time deposits, and extends loans to individuals and businesses. Commercial banks can be contrasted with investment banking firms, such as brokerage firms, which generally are involved in arranging for the sale of corporate or municipal securities. [FRBSF] Commercial Banks are allowed to engage in more varied lending activities and to offer more financial services than are the other depository institutions. Commercial banks are owned by stockholders and operated for profit. [FRBC] (see also loan, bank)
commercial online service: A commercial online service is an integrated package of services providing news, e-mail, a special-interest forum, information resources, shopping, and other services accessed by consumer and business computer users using proprietary software and a modem (examples include America Online, Microsoft Network, CompuServe, etc.). [GAO]
commercial/merchant server: A commercial/merchant server is a computer and/or computer program that provides information in response to requests by other computer programs. Some servers are capable of sending and receiving secure messages. [GAO] (see also Internet)
Committee on Uniform Securities Identification Procedures (CUSIP): Each type and issue of security will have its own unique CUSIP number. [GAO] (see also securities)
Commodity Futures Trading Commission (CFTC): CFTC and SEC are the primary regulators and oversee the actions of the clearing organizations under their jurisdictions to determine whether or not they are functioning in accordance with regulations and the law [GAO] (see also futures)
commodity prices: An index of commodities (such as oil and steel) traded in worldwide markets. [FRBC][FRBSF]
common property resources: Resources for which there are no clearly defined property rights; property owned in common by a society. [FACS]
Community Reinvestment Act (CRA): Enacted by Congress in 1977, the CRA encourages banks to help meet the credit needs of their communities for housing and other purposes, particularly in neighborhoods with low or moderate incomes, while maintaining safe and sound operations. [FRBSF] Encourages banks to help meet the credit needs of their communities for housing and other purposes, particularly in neighborhoods with low or moderate incomes, while maintaining safe and sound operations. [FRBC][FRBM] (see also bank)
Community Reinvestment Act Statement: A description available for public inspection at each bank office indicating, on a map, the communities served by that office and the types of credit the bank is prepared to extend within the communities served. [FRBSF]
company: A business entity which creates paperless entries for introduction into the ACH network. [ACH] (see also automated clearinghouse)
comparative advantage: Describes the ability of a person, company or country to produce a good or service at a lower cost relative to other goods and services. Even though a country may have an [FRBM] The ability of a producer to produce a good at a lower marginal cost than other producers; marginal cost in the sacrifice of some other good compared to the amount of a good obtained. [FACS] (see also fiscal policy)
comparison member: Comparison members are primarily government securities broker-dealers and clearing agent banks that are capable of interacting with GSCC operations. [GAO] (see also Government Securities Clearing Corporation, clearance, clearing agent bank)
competition: Rivalry among individuals in order to acquire more of something that is scarce. [FACS] (see also fiscal policy)
competitive bidders: One of two categories of bidders on Treasury securities: competitive and noncompetitive. Competitive bidders are usually financial institutions. [FRBSF] (see also noncompetitive bidders, treasury securities)
complements: A price change for one product leads to a shift in the opposite direction direction in the demand for another product. [FACS] (see also fiscal policy)
composite receivers' file (CRF): A file listing all depository financial institutions qualified to receive ACH entries. Call your association office to subscribe. The CRF is available from the FRB as magnetic tape for direct computer input, or on microfiche. [ACH] (see also automated clearinghouse)
Comprehensive Employment and Training Act (CETA): Federal funding for local governments to retrain and employ difficult-to-hire workers. [FACS] (see also fiscal policy)
Comptroller of the Currency: The Comptroller of the Currency is an officer of the Treasury Department responsible for chartering national banks and has primary supervisory authority over them. All national banks are required to be members of the Federal Reserve System and are insured by the Federal Deposit Insurance Corporation. [FRBC][FRBM]
consortium: A grouping of corporations to fulfill a combined objective or project that usually requires interbusiness cooperation and sharing of the goods. [FRBSF]
Consumer Advisory Council (CAC): A statutory body established by Congress in 1976. The Council, with 30 members who represent a broad range of consumer and creditor interests, advises the Board on the exercise of its responsibilities under the Consumer Credit Protection Act and on other matters on which the Board seeks its advice. [FRBC][FRBM] A statutory body established by Congress in 1976. The Council, with 30 members who represent a broad range of consumer and creditor interests, advises the Federal Reserve Board on the exercise of its responsibilities under the Consumer Credit Protection Act and on other matters on which the Federal Reserve Board seeks its advice. [FRBSF] (see also Federal Reserve System)
consumer price index (CPI): A measure of the average amount (price) paid for a market basket of goods and services by a typical U.S. consumer in comparison to the average paid for the same basket in an earlier base year. [FACS] A measurement of the cost of living determined by the Bureau of Labor Statistics. [FRBSF] (see also fiscal policy)
consumption expenditures: The total dollar value of all goods and services purchased by the household sector for current use. [FACS] (see also fiscal policy)
consumption function: A mathematical expression relating personal consumption expenditures to disposable income. [FACS] (see also fiscal policy)
contemporaneous reserve accounting (CRA): An accounting method which allows member banks of the Federal Reserve a one day lag when calculating their required reserves and reserves held as vault cash. Except for the one-day lag, assets and liabilities used in calculating reserves and required reserves are those of the same week. [FRBSF] (see also reserves)
Continuous Net Settlement (CNS): System operated by NSCC. It receives compared or locked-in securities trades from most of the major securities marketplaces in the United States, nets each day's trades together with any outstanding failed delivery instructions, and settles the resulting netted position at DTC. This significantly reduces the number of shares and dollars that need to be settled, and reduces participant risk via novation and settlement guarantees. [NSCC] (see also securities, National Securities Clearing Corporation, settlement)
contraction phase: The part of the business cycle when GNP, employment and production are on the decline. [FACS] (see also fiscal policy)
contractionary fiscal policy: A policy to increase governmental spending and/or a reduction in taxes. [FRBSF] (see also economics, fiscal policy)
contractionary monetary policy: A policy to restrict the growth of money and credit in the economy. [FRBSF] (see also economics, monetary policy)
corn laws: Tariffs which England placed on grain imports from 1815 to 1846. By restricting the supply or grain in England, these laws raised the price of grain in England and increased the value of English farmland. [FACS]
corporate payments: Corporate payments are payments that are used by businesses to pay other businesses for goods or services. [GAO]
corporate trade exchange (CTX): An ACH payment program for corporate to corporate payments. [ACH] (see also automated clearinghouse, exchange)
corporate trade payment (CTP): A payment made between corporations through the ACH network. [ACH] (see also automated clearinghouse)
correspondent bank: A bank that accepts deposits of and performs banking services for other depository institutions. [FRBC][FRBM][FRBSF] A correspondent bank is a bank that--by arrangement--holds the deposits of another bank and provides payments and other services for that bank. [GAO] (see also check, bank)
cosigner: A term referring to a person, other than the principle borrower, who signs for a loan. The cosigner(s) assumes equal liability for the loan. [FRBSF] Another person who signs for a loan and assumes equal liability for it. [FRBC][FRBM] (see also loan)
cost: The most valuable opportunity forsaken when a choice is made. [FACS] (see also fiscal policy)
cost-of-living adjustments: Automatic adjustments in incomes paid to individual recipients which are tied to the inflation rate, usually measured by the Consumer Price Index. [FACS] (see also fiscal policy)
cost-push inflation: A term that applies when increases in the price level are caused by increases in cost. [FACS] (see also fiscal policy)
council of economic advisors: Three persons who act as the Presidents chief economic advisers. [FACS] (see also economics)
craft unions: Exclusive combinations of workers in individual trades such as printers, shoemakers and bakers. [FACS]
credit: The capacity to borrow money up to a specified limit under specified conditions. [FACS] The promise to pay in the future in order to buy or borrow in the present. The right to defer payment of debt. [FRBC][FRBM][FRBSF] (see also credit card, creditworthiness, debt, finance charge) (includes open-end credit)
credit card: A credit card is a payment card issued to a person for purchasing goods and services and obtaining cash against a line of credit established by the issuer. Credit cards can be of two types: those issued by merchants and vendors, such as department stores or oil companies, and general purpose credit cards issued by banks. [GAO] Any card, plate, or coupon book that may be used repeatedly to borrow money or buy goods and services on credit. [FRBC][FRBM][FRBSF] (see also bank, chargeback, credit, credit line, electronic data capture, payment system, secure electronic transaction) (includes acquiring processor, address verification service, authorization, capture, credit card company, credit deposit, interchange, interchange fee, issuer, payment processor or credit card association)
credit card company: A credit card company is a company that owns the trademark of a particular credit card and may also provide a number of marketing, processing, or other services to the members using the card services. [GAO] (see also payment system, credit card) (includes Amercian Express, Discover, MasterCard, VISA)
credit deposit: The value of a merchant's credit card purchases that are credited to its bank account after the acquirer buys the merchant's sales slips. The deposit is credited. It is not funded until the acquirer gets the monetary value from the issuer during settlement. [GAO] (see also bank, credit card)
credit history: A record of how a person has borrowed and repaid debt. [FRBM][FRBSF] A record of how a person has borrowed and repaid debts. [FRBC] (see also creditworthiness, debt)
credit line: A credit line is the maximum amount of credit available in an open-ended credit arrangement, such as a bank credit card, which the lender may change at any time. The credit line is disclosed in the credit card agreement. [GAO] (see also bank, credit card)
credit scoring system: A statistical system used to determine whether or not to grant credit by assigning numerical scores to various characteristics related to creditworthiness. [FRBC][FRBM][FRBSF] (see also creditworthiness)
Credit Unions: Credit Unions are financial cooperative organizations of individuals with a common affiliation (such as employment, labor union membership, or place of residence). Credit unions accept deposits of members, pay interest (dividends) on them out of earnings, and primarily provide consumer installment credit to members. [FRBC] Financial cooperative organization of individuals who have a common bond, such as a place of employment, residence, or membership in a labor union. Credit unions accept deposits from members, pay interest (in the form of dividends) on the deposits out of earnings, and use their funds mainly to provide consumer installment loans to members. [FRBSF] (see also fiscal policy, loan)
creditworthiness: A creditor's measure of a consumer's past and future ability and willingness to repay debts. [FRBC][FRBM][FRBSF] (see also credit, credit history, credit scoring system, debt)
crowding in: Increase of private investment through the income-raising effect of government spending financed by deficits. [FACS] (see also fiscal policy)
crowding out: The tendency for federal government, by deficit financing to compete with firms or persons for borrowed funds; that is, firms and households unable to borrow at a low rate of interest curtail their investment and consumption spending. [FACS] (see also fiscal policy, interest)
currency: Paper money issued by the government. [FACS] (see also fiscal policy)
currency appreciation: An increase in the value of one currency relative to another currency. Appreciation occurs when, because of a change in exchange rates, a unit of one currency buys more units of another currency. [FRBM][FRBSF] (see also currency depreciation)
currency depreciation: A decline in the value of one currency relative to another currency. Depreciation occurs when, because of a change in exchange rates, a unit of one currency buys fewer units of another currency. [FRBM][FRBSF] (see also currency appreciation, exchange rate, foreign currency operations)
currency devaluation: A deliberate downward adjustment in the official exchange rate established, or pegged, by a government against a specified standard, such as another currency or gold. [FRBM][FRBSF] (see also currency revaluation, exchange rate, foreign currency operations)
currency option: Currency options are options that represent the right to buy or sell foreign currency at a particular price within a specified period. [GAO] (see also foreign currency operations, option)
currency revaluation: A deliberate upward adjustment in the official exchange rate established, or pegged, by a government against a specified standard, such as another currency or gold. [FRBM][FRBSF] (see also currency devaluation, exchange rate, foreign currency operations)
current account: Acategory in the balance of payments account that includes all transactions that either contribute to national income or involve the spending of national income. [FACS]
current account balance: The difference between the nation's total exports of goods, services, and transfers and its total imports of them. Current account balance calculations exclude transactions in financial assets and liabilities. [FRBSF] The difference between the nation's total exports of goods, services, and transfers and its total imports of them. It excludes transactions in financial assets and liabilities. [FRBC][FRBM]
customer: A natural person(s) that maintains an account at a Depository Financial Institution. A customer may authorize a financial institution to debit/credit his or her account in response to an ACH entry. [ACH] (see also automated clearinghouse)
customer initiated entry (CIE): These are ACH entries initiated by a consumer through direct contact with an originator such as a bill payment system. [ACH] (see also automated clearinghouse)
cyclical unemployment: Temporary layoff of workers due to downturns in the pace of economic activity. [FACS] Unemployment caused by a low level of aggregate demand associated with recession in the business cycle. [FRBSF] (see also economics, fiscal policy, unemployment rate)
Data Encryption Standard: A technique by which a message is scrambled into an indecipherable stream of bits for transmission. [ACH]
data limitations: In stabilization policy, refers to two types: 1) quantitative factual information or data that is only available after the event (e.g., unemployment figures for last month); 2) the raw information that is adjusted for seasonal variations or changes in prices; therefore, data may not accurately measure the activity. [FRBSF] (see also fiscal policy)
data transmission: The electronic exchange of information between two data processing points (computers). [ACH]
day cycle: The first scheduled time for the Federal Reserve system's interregional transmission of data from Originating ACHs to Receiving ACHs. Also referred to as the 'day time window'. [ACH] (see also automated clearinghouse)
day trade: Also know as a 'daylight trade.' The purchase and sale or the short sale and cover of the same security in a margin account on the same day. [FRBC] Also known as a 'daylight trade'. The purchase and sale or the short sale and cover of the same security in a margin account on the same day. [FRBM][FRBSF]
daylight overdraft: A daylight overdraft is an intraday loan that occurs when a bank transfers funds in excess of its reserve account. [GAO] (see also bank, loan)
debit card: A card that resembles a credit card but which debits a transaction account (checking account) with the transfers occuring contemporaneously with the customer's purchases. A debit card may be machine readable, allowing for the activation of an automated teller machine or other automated payments equipment. [FRBC] A card that resembles a credit card but which debits a transaction account (checking account) with the transfers occurring contemporaneously with the customer's purchases. A debit card may be machine readable, allowing for the activation of an automated teller machine or other automated payments equipment. [FRBM][FRBSF] (see also Automated Teller Machines, check, payment system)
debt: (see also Federal debt, OTC margin bond, U.S. Treasury securities, additional settlement obligation, amortization, annual percentage rate, bond, buydown, capital market, credit, credit history, creditworthiness, direct debit, government budget constraint, government securities, liabilities, liability on an account, long-term interest rates, money market, negative amortization, principal payments, securities, service charge, short-term interest rates, special drawing rights, surcharge, total nonfinancial debt, treasury securities) (includes interest, loan)
Debt Collection Improvement Act of 1996 (DCIA)
decryption: Decryption is the restoration of encrypted data to their original text. [GAO] (see also encryption)
default: Failure to meet the terms of a credit agreement. [FRBC][FRBM][FRBSF]
deficit: The amount each year by which government spending is greater than government income. [FRBSF] (see also fiscal policy)
deficit spending: A term which refers to the situation wherein he government spends more than it receives in taxes. [FACS] (see also fiscal policy)
delivery-versus-payment (DVP)
demand: The maximum quantities of some good that people will choose (or buy) at different prices. An identical definition is the relative value of the marginal unit of some good when different quantities of that good are available. [FACS] (see also fiscal policy)
demand curve: A graphic representation of the relationship between prices and the corresponding quantities demanded per time period. [FACS] (see also fiscal policy)
demand deposit: A deposit payable on demand, or a time deposit with a maturity period or required notice period of less than 14 days, on which the depository institution does not reserve the right to require at least 14 days written notice of intended withdrawal. Commonly takes the form of a checking account. [FRBM] A deposit payable on demand, or a time deposit with a maturity period or required notice period of less than 7 days, on which the depository institution does not reserve the right to require at least 7 days written notice of intended withdrawal. Commonly takes the form of a checking account. [FRBC] A deposit that may be withdrawn at any time without prior written notice to the depository institution. A checking account is the most common form of demand deposit. [FRBSF] Checking accounts in commercial banks. These banks are obliged to pay out funds when depositors write checks on those numbers. Checking accounts are not cash - they are numbers recorded in banks. [FACS] (see also bank, check)
demand-pull inflation: A term used when an increase in aggregate demand occurs which cannot be offset by a corresponding increase in real supply causing an increase in the price level (inflation). [FACS] (see also fiscal policy)
deposit ceiling rates of interest: Maximum interest rates that can be paid on savings and time deposits at federally insured commercial banks, mutual savings banks, savings and loan associations, and credit unions. Ceilings on credit union deposits are established by the Depository Institutions Deregulation Committee (DIDC). Under current law, deposit interest rate ceilings are being phased out over a six-year period, ending in 1986 under the oversight of the DIDC. [FRBSF] (see also bank, loan, interest)
depositary bank: A depositary bank is the bank at which a check is first deposited. [GAO] (see also depository institution, check, bank)
depository institution: A financial institution that obtains its funds mainly through deposits from the public. This includes commercial banks, savings and loan associations, savings banks, and credit unions. Although historically they have specialized in certain types of credit, the powers of nonbank depository institutions have been broadened in recent years. For example, NOW accounts, credit union share drafts, and other services simialr to checking accounts may be offered by thrift institutions. [FRBSF] Financial institution that obtains its funds mainly through deposits from the public; includes commercial banks, savings and loan associations, savings banks, and credit unions. [FRBC] (see also depositary bank, Savings and Loan Associations, loan, bank) (includes nonmember depository institution)
depository institutions debit cards: Plastic cards encoded with electromagnetic identification. Banks may issue them to customers who meet certain qualifications. Customers can use their card to pay for purchases electronically using point-of-sale terminals. [FRBC]
Depository Institutions Deregulation Committee (DIDC): The Committee responsible for the orderly phase-out over a six-year period of interest rate ceilings on time and savings accounts at depository institutions. Voting members of the DIDC are the Secretary of the Treasury and the Chairmen of the Federal Reserve Board, Federal Deposit Insurance Corporation, Federal Home Loan Bank Board, and National Credit Union Administration Board. The Comptroller of the Currency serves as a non-voting member. [FRBC] The Committee responsible for the orderly phase-out over a six-year period of interest rate ceilings on time and savings accounts at depository institutions. Voting members of the DIDC are the Secretary of the Treasury and the chairmen of the Federal Reserve Board, Federal Deposit Insurance Corporation, Federal Home Loan Bank Board, and National Credit Union Administration Board. The Comptroller of the Currency serves as a non-voting member. [FRBSF] (see also bank, interest)
Depository Trust Corporation (DTC): DTC tracks the transfer of equities and corporate and municipal bonds cleared through NSCC via an automated book-entry system. [GAO] The Depository Trust Corporation (DTC) holds, in its vaults, securities owned by its participants. DTC makes and receives deliveries of securities in book-entry form, allowing settlement of securities transactions electronically. Through the Continuous Net Settlement (CNS) system and Institutional Delivery (ID) system, as well as the Participant Terminal System (PTS), DTC settlement facilities are tied in to a broad range of related settlement systems. [NSCC] (see also National Securities Clearing Corporation, securities) (includes Institutional Delivery)
descriptive statement: A bank account summary that contains information concerning one or more entries for which no separate item is enclosed. ACH entries necessitate some form of descriptive statement unless a substitute enclosure document is produced by the financial institution. Minimum reporting requirements are defined by Regulation E. [ACH] (see also automated clearinghouse, bank)
Deutsche mark (DM)
diminishing relative value: The principle that if all other factors remain constant, and individuals relative value of a good will decline as more of that good is obtained. Accordingly, the relative value of a good will increase, other factors remaining constant, as an individual gives up more of that good. [FACS] (see also fiscal policy)
diminishing returns: As more and more of a productive resource is added to a given amount to other productive resources, additions to output will eventually diminish other factors, such as technology and the degree of specialization remaining constant. [FACS] (see also fiscal policy)
direct debit: A method of ACH collection used where the debtor gives authorization to debit his or her account upon the receipt of an entry issued by a creditor. [ACH] (see also automated clearinghouse, debt)
direct deposit: A method of payment which electronically credits your checking or savings account. [FRBM][FRBSF] A service provided by many employers, government agencies, and other parties. The party offering the service can transfer funds electronically to the appropriate financial institution, which deposits the funds directly in an individual's account (see ACH and EFT). The customer receives a written notification that the funds were deposited, including the effective date and account number used for the transaction. [FRBC] (see also automated clearinghouse, electronic funds transfer)
direct participants: Direct participants are financial institutions that are permitted to transact with the clearing organization, and all customers come to the clearing organization through them. The term usually refers to institutions that interact with NSCC. [GAO] (see also National Securities Clearing Corporation)
dirty float: A type of floating exchange rate that is not completely freely floating because central banks intervene from time to time to alter the rate from its free-market level. It is still a floating rate because it has not been pegged at a predetermined par value. [FRBM][FRBSF] (see also exchange rate, foreign currency operations, float)
discount: An amount deducted from the regular price for those who purchase with cash instead of credit. [FRBC]
discount payment: The difference between the face value and the price paid for a security. [FRBM][FRBSF] (see also securities)
discount rate: The interest a private bank pays for a loan from the U.S. Federal Reserve System. [FACS] The interest rate at which an eligible depository institution may borrow funds, typically for a short period, directly from a Federal Reserve Bank. The law requires that the board of directors of each Reserve Bank establish the discount rate every 14 days subject to the approval of the Board of Governors. [FRBSF] The interest rate at which an eligible depository institutions may borrow funds, typically for a short period, directly from a Federal Reserve Bank. The law requires the board of directors of each Reserve Bank to establish the discount rate every 14 days subject to the approval of the Board of Governors. [FRBC] The interest rate at which eligible depository institutions may borrow funds, usually for short periods, directly from the Federal Reserve Banks. The law requires the board of directors of each Reserve Bank to establish the discount rate every 14 days subject to the approval of the Board of Governors. [FRBM] (see also Federal Reserve System, bank, fiscal policy, loan, interest)
discount window: Figurative expression for Federal Reserve facility for extending credit directly to eligible depository institutions (those with transaction accounts or nonpersonal time deposits). [FRBC][FRBM] Figurative expression referring to the Federal Reserve's facility for extending credit directly to eligible depository institutions (those with transaction accounts or nonpersonal time deposits). [FRBSF]
Discover: (see also credit card company)
discretionary fiscal policy: Changes in a fiscal (tax or spending) program initiated by the government in order to change aggregate demand. [FACS] (see also economics, fiscal policy)
disequalibrium: The quantity demanded does not equal the quantity supplied at the going price. [FACS] (see also fiscal policy)
disinflation: A slowdown in the rate of inflation. [FACS] (see also fiscal policy)
disposable income: The amount of an individuals income that remains after the deduction of income taxes. [FACS] (see also fiscal policy)
dividends: Profits of a firm that are distributed to its investors (stockholders). [FACS]
division of labor: Assigning of specific tasks to workers and productive resources; it is a reflection of economic specialization. [FACS] (see also economics)
dual trading: Dual trading occurs when an individual (or representative of a firm) trades on behalf of customers and also trades for his or her own or the firm's proprietary account. [GAO]
durable merchandise: Goods that have a relatively lengthy life (television sets, radios, etc.) [FRBSF]
DVP system: A delivery vs. payment (DVP) system is a system that ensures that the final transfer of one asset will occur if, and only if, the final transfer of another asset (or other assets) occurs. [GAO]
East Rutherford Operations Center (EROC): Federal Reserve primary payment processing computing system [GAO] (see also Federal Reserve System)
eastern standard time (EST)
eastern time (ET)
economic growth: A sustained increase in total output or output per person for an economy over a long period of time. [FACS] An increase in the nation's capacity to produce goods and services. [FRBSF] (see also economics)
Economic Recovery Tax Act of 1981 (ERTA): Designed to foster savings and investment to encourage long-term growth through reductions of personal income tax rates, taxes on personal savings for retirement and business taxes for firms investing in new capital. [FACS] (see also economics, fiscal policy)
economic regulations: The control of entry into the market, pricing, the extension of service by established firms and issues of quality control. [FACS] (see also economics)
economic shocks: Events that impact the economy, come from outside it, are unexpected and unpredictable (e.g., Hurricane Andrew in 1991, the rise in oil prices by OPEC). [FRBSF] (see also economics)
economic specialization: Concentration of activity in a few particular tasks or in producing only a few items. [FACS] (see also economics)
economics: The study of choice and decision-making in a world with limited resources. [FACS] (see also Board of Governors, Economic Recovery Tax Act of 1981, Employment Act of 1946, Full Employment and Balanced Growth Act of 1978, Keynesians, academic consultants, activist fiscal policy, business cycles, capacity utilization rate, choice, contractionary fiscal policy, contractionary monetary policy, council of economic advisors, cyclical unemployment, discretionary fiscal policy, division of labor, economic growth, economic regulations, economic shocks, economic specialization, expansionary fiscal policy, expansionary monetary policy, expected rate of inflation, fiscal policy, gross national product, implementation lag, large econometric models, macroeconomics, microeconomics, monetary policy, new deal, normative economics, option, political economy, rational expectations, recession, stagflation, supply-side economics, time lags)
Edge Act corporation: An organization chartered by the Federal Reserve to engage in international banking operations. The Board acts upon applications by U.S. and foreign banking organizations to establish Edge corporations. It also examines Edge corporations and their subsidiaries. The Edge corporation gets its name from Senator Walter Edge of New Jersey, the sponsor of the original legislation to permit formation of such organizations. [FRBC][FRBM]
effective entry date: The date placed on an ACH transaction by the Originator of the transaction - it is normally the date the originator intended the transfer to take place. [ACH] (see also automated clearinghouse)
efficiency: The allocation of goods to their uses of highest relative value. [FACS] (see also fiscal policy)
elasticity of demand: The percentage change in the quantity demanded divided by the percentage change in price. [FACS] (see also fiscal policy)
electronic banking: Electronic banking is a banking activity accessed by electronic means. [GAO] (see also bank)
electronic benefits transfer: The transfer of public entitlement payments, such as welfare or food stamps, via direct deposit or point-of-sale technology. The recipient can be given an identification card, similar to a benefit card, and a PIN number to allow them to access the benefits through an electronic network. [FRBC] (see also payment system)
Electronic Check Clearing House Organization (ECCHO): ECCHO drafts rules and designs formats for electronic check processing among its members. Banks that are ECCHO participants can exchange electronic check data among themselves before the paper checks are physically presented for payment. [GAO] (see also check, clearing house)
electronic check presentment (ECP): ECP is a process by which the MICR-line information is sent electronically to the paying bank. [GAO] (see also check)
electronic data capture (EDC): EDC is a point-of-sale terminal that reads the information encoded in the magnetic stripe of bank cards. These terminals electronically authorize and capture transaction data, eliminating the need for a paper deposit. [GAO] (see also credit card)
Electronic Fund Transfer Systems (EFTS): A variety of systems and technologies for transferring funds (money) electronically rather than by check. Includes Fedwire, Bankwire, automated clearinghouses (ACHs), and other automated systems. [FRBC] A variety of systems and technologies for transferring funds (money) electronically rather than by check. This includes Fedwire, Bankwire, automated clearinghouses (ACHs), and other automated systems. [FRBM][FRBSF] (see also electronic funds transfer)
electronic funds transfer (EFT): A generic term describing any transfer of funds between parties or depository institutions via electronic data systems. [FRBC] A generic term used whenever money is moved without the use of a check or draft. [ACH] EFT is any transfer of funds between accounts using an electronic terminal, telephone, computer, or magnetic tape and that does not use checks or other paper. [GAO] Transfer of funds electronically rather than by check or cash. The Federal Reserve's Fedwire and automated clearinghouse services are EFT systems. [FRBSF] (see also automated clearinghouse, payment system) (includes Electronic Fund Transfer Systems, direct deposit)
Electronic Funds Transfer Act (EFTA)
Electronic Money System (EMS): Citibanks's EMS is designed to provide secure, real-time transactions over any network, including the Internet. EMS offers a blend of anonymity and disclosure. Each electronic transaction would have an audit trail that could be traced, but the identity of the parties would remain anonymous. [GAO] (see also bank, money)
electronic purse: A specific type of smart-card. A chip in the card provides multiple payment options such as debit, credit, and direct payment from a stored balance. The electronic purse allows for transactions with different merchants in many locations. [FRBC]
embargo: A deliberate cutoff of supply, typically intended as a political statement. [FACS] (see also fiscal policy)
Employment Act of 1946: Set full employment and price stability as national policy goals and established the Council of Economic Advisors. [FACS] (see also economics, fiscal policy)
encryption: Encryption is the process of disguising a message (using mathematical formulas called algorithms) in such a way as to hide its substance, a process of creating secret writing. [GAO] (see also decryption, secure electronic transaction)
entitlements: Government transfer payments made to individuals having certain designated characteristics and circumstances, such as age or need. [FACS] (see also fiscal policy)
equation of exchange: (M x T = P x Q) The equation indicates that the money supply multiplied by the number of times that money turns over equals the price level multiplied by real output. [FACS] (see also fiscal policy, exchange)
equilibrium: The amount of output supplied equals the amount demanded. At equilibrium, the market has neither a tendency to rise nor fall but clears at the existing price. [FACS] (see also fiscal policy)
equilibrium real interest rate: The rate that would be consistent with the full employment of labor and industrial capacity, and with real GDP being at its long-run potential level. This rate is needed as a benchmark to judge whether a given real interest rate is expansionary or contractionary. [FRBSF] (see also fiscal policy, interest)
equity index option: An equity index option is an options contract that covers the price of a diversified stock portfolio that matches a designated stock-index (a statistical indicator used to measure changes in stock groupings). [GAO] (see also option)
equity/stock: Equity or stock is a financial instrument that represents ownership in a company. [GAO]
Eurodollars: Deposits denominated in U.S. dollars at banks and other financial institutions outside the United States. Although this name originated because of the large amounts of such deposits held at banks in Western Europe, similar deposits in other parts of the world are also called Eurodollars. [FRBC][FRBM][FRBSF] (see also bank, money)
excess reserves: Amount of reserves held by an institution in excess of its reserve requirement and required clearing balance. [FRBC][FRBSF] (see also reserves)
exchange: An exchange is an organized market with transactions concentrated in a physical facility with participants entering two-sided quotations (bid and ask) on a continuous basis. [GAO] The voluntary transfer of rights to use goods. [FACS] (see also National Securities Clearing Corporation, fiscal policy) (includes Exchange Clearing House, Private ACH Exchange, Securities and Exchange Commission, corporate trade exchange, equation of exchange, exchange rate, exchange value, fixed exchange rate system, fixed exchange rates, floating exchange rate system, floating exchange rates, foreign exchange desk, foreign exchange rate, forward exchange, gains of exchange, gold exchange standard, interregional exchange, intraregional exchange)
Exchange Clearing House (ECHO): ECHO system is based in London and calculates multilateral netting of trades that are passed throught it. For each currency, a user will have only a signle payment obligation or expected receipt. Settlement takes place via traditional national payment systems into and out of ECHO accounts in each country. [GAO] (see also clearing house, exchange, multilateral netting)
exchange rate: The price of a country's currency in terms of another country's currency. [FRBM][FRBSF] The price of one currency in terms of another. [FACS] (see also currency depreciation, currency devaluation, currency revaluation, dirty float, fiscal policy, fixed exchange rate system, floating exchange rate system, foreign currency operations, purchasing power parity theory, exchange) (includes fixed exchange rates, floating exchange rates, foreign exchange rate)
exchange value: The purchasing power of a unit of currency for goods and services in the marketplace. [FACS] (see also fiscal policy, exchange)
exclusion principle: The owner of a private good may exclude others from use unless they pay. [FACS]
Executive Committee: A decision-making body of the FRBSF comprised of a number of the Bank's senior officers, the Committee and its six satellite committees were established in 1995 to replace the smaller, more centralized Management Committee. The revised committee structure was intended to decentralize decision-making and promote increased information-sharing and teambuilding District-wide. [FRBSF]
exempted security: A security that is exempted from most provisions of the securities laws, including the margin rules. Such securities include U.S. government and agency securities and municipal securities designated by the SEC. [FRBM][FRBSF] A security that is exempted from most provisions of the securities laws, including the margin rules. Such securities include U.S. government and agency securities, municipal securities designated by the SEC. [FRBC] (see also securities)
exercise: Exercise means to make use of the 'rights' in a contract. For instance, a buyer of a call option may exercise the right to buy the underlying asset at a particular price agreed upon when the contract was purchased. [GAO] (see also option)
expansion phase: The phase of the business cycle when the economy is growing rapidly, output is increasing, employment is rising, industrial production is increasing and prices are tending to rise. [FACS] (see also fiscal policy)
expansionary fiscal policy: A policy to decrease governmental expenditures and/or to increase taxes. [FRBSF] (see also economics, fiscal policy)
expansionary monetary policy: A policy of the Federal Reserve System that is designed to expand the growth of money and credit in the economy. [FRBSF] (see also economics, monetary policy)
expected rate of inflation: The public's expectations for inflation. These expectations determine how large an effect a given policy action by the Fed will have on economic activity. [FRBSF] (see also economics)
Expedited Funds Availability Act of 1987 (EFAA)
externalities: Costs or benefits that fall on third parties. [FACS]
Federal Advisory Council (FAC): An advisory group consisting of one member, usually a banker, from each Federal Reserve District. Members are elected annually by the Reserve Bank boards of directors. Members meet with the Federal Reserve Board at least four times a year to make recommendations on business and financial issues relating to banking, but have no real power. [FRBSF] This group consists of one member from each Federal Reserve District (usually a banker) elected annually by the Board of Directors of each of the 12 Federal Reserve Banks. They meet with the Board to discuss business and financial conditions and make advisory recommendations. [FRBC][FRBM] (see also bank, Federal Reserve System)
Federal debt: The current dollar sum of obligations equal to the accumulated past deficits minus surpluses of the United States government. [FACS] (see also debt, fiscal policy)
Federal Deposit Insurance Corporation (FDIC): A federal regulatory agency that insures all deposit accounts in member banks up to $100,000. [FACS] Agency of the federal government that insures accounts at most commercial banks and mutual savings banks. The FDIC also has primary federal supervisory authority over insured state banks that are not members of the Federal Reserve System. [FRBC][FRBM] An independent deposit insurance agency created by Congress in 1933 to maintain stability and public confidence in the nation's banking system. The FDIC promotes safety and soundness of insured depository institutions and the U.S. financial system by identifying, monitoring, and addressing risks to the deposit insurance funds; minimizes disruptive effects from the failure of banks and savings associations; and ensures fairness in the sale of financial products and provision of financial services. [FRBSF] (see also bank, bank supervision)
federal funds: Reserve balances that depository institutions lend each other, usually on an overnight basis. In addition, Federal funds include certain other kinds of borrowings by depository institutions from each other and from federal agencies. [FRBM]
federal funds rate: The interest rate at which banks borrow federal funds. [FRBM] The interest rate at which banks borrow surplus reserves and other immediately available funds. The federal funds rate is the shortest short-term interest rate, with maturities on federal funds concentrated in overnight or one-day transactions. [FRBC] (see also reserves)
Federal Home Loan Bank Board (FHLBB): The agency of the federal government that supervises all federal savings and loan associations and federally insured state-chartered savings and loan associations. The FHLBB also operates the Federal Savings and Loan Insurance Corporation, which insures accounts at federal savings and loan associations and those state-chartered associations that apply and are accepted. In addition, the FHLBB directs the Federal Home Loan Bank System, which provides a flexible credit facility for member savings institutions to promote the availability of home financing. The FHL Banks also own the Federal Home Loan Mortgage Corporation, established in 1970 to promote secondary markets for mortgages. [FRBC][FRBSF] (see also loan)
Federal margin call: A broker's demand upon a customer for cash or securities needed to satisfy the required Regulation T down payment for a purchase or short sale of securities. [FRBM][FRBSF] A broker's demand upon a customer for cash, or securities needed to satisfy the required Regulation T downpayment for a purchase or short sale of securities. [FRBC] (see also securities)
Federal Open Market Committee (FOMC): A 12-member committee consisting of the seven members of the Federal Reserve Board and five of the twelve Federal Reserve Bank presidents. The president of the Federal Reserve Bank of New York is a permanent member while the other Federal Reserve presidents serve on a rotating basis. The Committee sets objectives for the growth of money and credit that are implemented through purchases and sales of U.S. government securities in the open market. The FOMC also establishes policy relating to System operations in the foreign exchange markets. [FRBC] A 12-member committee consisting of the seven members of the Federal Reserve Board and five of the twelve Federal Reserve Bank presidents. The president of the New York Federal Reserve Bank is a permanent member while the other Federal Reserve presidents serve on a rotating basis. The Committee sets objectives for the growth of money and credit that are implemented through purchases and sales of U.S. government securities in the open market. The FOMC also establishes policy relating to System operations in the foreign exchange markets. [FRBM] Twelve-member committee made up of the seven members of the Board of Governors; the president of the New York Federal Reserve Bank; and, on a rotating basis, the presidents of four other Reserve Banks. The FOMC meets eight times a year to set Federal Reserve guidelines regarding the purchase and sale of government securities in the open market as a means of influencing the volume of bank credit and money in the economy. It also establishes policy relating to System operations in the foreign exchange rates. [FRBSF] (see also bank, Federal Reserve System)
Federal Reserve account: A Federal Reserve account is a noninterest-earning account that a depository institution maintains with a Federal Reserve Bank. The balance in this account is maintained for purposes of (1) satisfying the Federal Reserve's reserve requirements and/or (2) settling payments cleared through the Federal Reserve. The balances in these accounts play a central role in the exchange of funds between depository institutions. [GAO] (see also interest, Federal Reserve System)
Federal Reserve Act of 1913: Federal legislation that established the Federal Reserve System. [FRBSF] (see also Federal Reserve System)
Federal Reserve Bank: One of the twelve operating arms of the Federal Reserve System, located throughout the nation, that together with their twenty-five Branches carry out various System functions, including operating a nationwide payments system, distributing the nation's currency and coin, supervising and regulating member banks and bank holding companies, and serving as banker for the U.S. Treasury. [FRBSF] One of the twelve operating arms of the Federal Reserve System, located throughout the nation, that together with their twenty-five Branches carry out various System functions. [FRBM] (see also Federal Reserve System, bank) (includes Federal Reserve Bank of Chicago, Federal Reserve Bank of Minneapolis, Federal Reserve Bank of New York, Federal Reserve Bank of San Francisco)
Federal Reserve Bank of Chicago (FRBC): (see also Federal Reserve Bank)
Federal Reserve Bank of Minneapolis (FRBM): (see also Federal Reserve Bank)
Federal Reserve Bank of New York (FRBNY): (see also Federal Reserve Bank)
Federal Reserve Bank of San Francisco (FRBSF): (see also Federal Reserve Bank)
Federal Reserve District: (also 'Reserve District,' or 'District') One of the twelve geographic regions served by a Federal Reserve Bank. [FRBSF] One of the twelve geographic regions served by a Federal Reserve Bank. [FRBM] (see also Federal Reserve System)
Federal Reserve float: Checkbook money that for a period of time appears on the books of both the payor and payee due to the lag in the collection process. Federal Reserve float often arises during the Federal Reserve's check collection process. In order to promote an efficient payments mechanism with certainty as to the date funds become available, the Federal Reserve has employed the policy of crediting the reserve accounts of depository institutions depositing checks according to an availability schedule before the Federal Reserve is able to obtain payment from others. [FRBC] Checkbook money that, for a period of time, appears on the books of both the payor and payee due to the lag in the collection process. Federal Reserve float often arises during the Federal Reserve's check collection process. In order to promote an efficient payments mechanism with certainty as to the date funds become available, the Federal Reserve has employed the policy of crediting the reserve accounts of depository institutions depositing checks according to an availability schedule before the Federal Reserve is able to obtain payment from others. [FRBSF] (see also check, Federal Reserve System, float)
Federal Reserve notes: Nearly all of the nation's circulating paper currency consists of Federal Reserve notes printed by the Bureau of Engraving and Printing and issued to the Federal Reserve Banks to put into circulation through commercial banks and other depository institutions. Federal Reserve notes are obligations of the U.S. government. [FRBSF] Nearly all of the nation's circulating paper currency consists of Federal Reserve notes printed by the Bureau of Engraving and Printing and issued to the Federal Reserve Banks which put them into circulation through commercial banks and other depository institutions. Federal Reserve notes are obligations of the U.S. government. [FRBM] Nearly all of the nation's circulating paper currency consists of Federal Reserve notes printed by the Bureau of Engraving and Printing and issued to the Federal Reserve Banks which put them into circulation through depository institutions. Federal Reserve notes are obligations of the U.S. government. [FRBC] (see also Federal Reserve System)
Federal Reserve System: The Federal Reserve System operates a comprehensive, nationwide system for clearing and settling checks drawn on depository institutions located in all regions of the United States. [GAO] The U.S. central bank consisting of 12 regional banks are run by a board of governors appointed by the president for overlapping 14-year terms; formally independent of the executive and congressional branches of government; private bank members of the system own their assets. [FACS] The central bank of the United States created by Congress, consisting of a seven-member Board of Governors in Washington, D.C., 12 regional Reserve Banks, and depository institutions that are subject to reserve requirements. All national banks are members and state chartered banks may elect to become members. State member banks are supervised by the Board of Governors and the Reserve Banks. Reserve requirements established by the Federal Reserve Board apply to nonmember depository institutions as well as member banks. Both classes of institutions have access to Federal Reserve discount borrowing privileges and Federal Reserve services on an equal basis. [FRBM] The central bank of the United States created by Congress, consisting of a seven-member Board of Governors in Washington, D.C., 12 regional Reserve Banks, and depository institutions that are subject to reserve requirements. All national banks are members; state chartered banks may elect to become members, and state members are supervised by the Board of Governors and the Reserve Banks. Reserve requirements established by the Federal Reserve Board apply to nonmember depository institutions as well as member banks. Both classes of institutions have access to Federal Reserve discount borrowing privileges and Federal Reserve services on an equal basis. [FRBC] The central bank of the United States, created by Congress and made up of a seven-member Board of Governors in Washington, DC, twelve regional Federal Reserve Banks, and their twenty-five Branches. [FRBSF] (see also Monetary Control Act of 1980, bank, bank supervision, discount rate, fiscal agency services, fiscal policy, lender of last resort, matched sale-purchase agreements, member bank, monetary policy, net debit cap, nonmember bank, nonmember depository institution, required clearing balance, required reserve balance, required reserves) (includes Board of Governors, Consumer Advisory Council, East Rutherford Operations Center, FRCS-80, Federal Advisory Council, Federal Open Market Committee, Federal Reserve Act of 1913, Federal Reserve Bank, Federal Reserve District, Federal Reserve account, Federal Reserve float, Federal Reserve notes, Fedwire, regional check processing center)
Federal Trade Commission (FTC)
FEDNET: A high-speed, nationwide communications network that electronically links all Federal Reserve Banks and branches with depository institutions. [GAO] (see also FRCS-80, Fedwire)
Fedwire: Electronic funds transfer network operated by the Federal Reserve. Fedwire is usually used to transfer large amounts of funds and U.S. government securities from one institution's account at the Federal Reserve to another institution's account. It is also used by the U.S. Department of the Treasury and other federal agencies to collect and disburse funds. [FRBSF] The Federal Reserve System's wire transfer service, used to move large sums of money between depository institutions such as banks, savings & loans, and credit unions. [FRBC] The Federal Reserve funds transfer system. Fedwire is used for transferring reserve account balances of depository institutions and government securities. Fedwire is also used for the settlement of other clearing systems, such as CHIPS. [FRBC][FRBM] The electronic funds transfer system operated by the Federal Reserve. [GAO] (see also clearing agent bank, loan, FRCS-80, Federal Reserve System, payment system) (includes Account Balance Monitoring System, FEDNET, Office of Foreign Assets Control)
fiat money: Money that has little or no intrinsic value as a commodity; it is costless to produce, usually taking the form of tokens or pieces of paper; and is not redeemable for any commodity. [FRBM][FRBSF] (see also money)
file: A file is a group of entries transmitted by originating institutions or to receiving institutions by ACH operators. A file may contain one or more batches of entries. [GAO]
file header: The first record of an ACH file containing information necessary to route, validate and track the ACH contained within the file. [ACH] (see also automated clearinghouse)
finality: Finality is an irrevocable and unconditional transfer of payment. [GAO]
finance charge: The total dollar amount paid to get credit. [FRBC] The total dollar amount paid to obtain credit. [FRBM][FRBSF] (see also credit)
financial institution: An institution that uses its funds chiefly to purchase financial assets (deposits, loans, securities) as opposed to tangible property. Financial institutions can be classified according to the nature of the principal claims they issue: nondeposit intermediaries include, among others, life and property/casualty insurance companies and pension funds, whose claims are the policies they sell, or the promise to provide income after retirement; depository intermediaries obtain funds mainly by accepting deposits from the public. The major depository institutions are listed below. Although historically they have specialized in certain types of credit, the powers of nonbank depository institutions have been broadened in recent years. For example, NOW accounts, credit union share drafts, and other services similar to checking accounts may be offered by thrift institutions. [FRBC] An institution that uses its funds chiefly to purchase financial assets (loans, securities) as opposed to tangible property. Financial institutions can be classified according to the nature of the principal claims they issue nondeposit intermediaries include, among others, life and property/casualty insurance companies and pension funds, whose claims are the policies they sell, or the promise to provide income after retirement; depository intermediaries obtain funds mainly by accepting deposits from the public. The major depository institutions are listed below. Although historically they have specialized in certain types of credit, the powers of nonbank depository institutions have been broadened in recent years. For example, NOW accounts, credit union share drafts, and other services similar to checking accounts may be offered by thrift institutions. [FRBM] (see also loan)
financial instrument: Any written instrument having monetary value or evidencing a monetary transaction. [FRBSF]
fiscal agency services: Services performed by the Federal Reserve Banks for the U.S. government. These include maintaining deposit accounts for the Treasury Department, paying U.S. government checks drawn on the Treasury, and issuing and redeeming savings bonds and other government securities. [FRBC][FRBM] Services performed by the Federal Reserve Banks on behalf of the U.S. government. These include maintaining deposit accounts for the Treasury Department, paying U.S. government checks drawn on the Treasury, and issuing and redeeming savings bonds and other government securities. [FRBSF] (see also Federal Reserve System, bank)
fiscal policy: Federal government policy regarding taxation and spending, set by Congress and the Adminstration. [FRBC] Government policy regarding taxation and spending. Fiscal policy is made by Congress and the Administration. [FRBM] The federal government's decisions about the amount of money it spends and collects in taxes to achieve a full employment and non-inflationary economy. [FRBSF] Those federal-government expenditure, tax and borrowing decisions that affect the level of national economic activity. [FACS] (see also monetary policy, Bretton Woods, Bureau of Labor Statistics, Comprehensive Employment and Training Act, Credit Unions, Economic Recovery Tax Act of 1981, Employment Act of 1946, Federal Reserve System, Federal debt, Fisher effect, Friedmans Law, Full Employment and Balanced Growth Act of 1978, International Monetary Fund, Keynesians, Lorenz Curve, M1, M2, Malthusian Trap, Nominal Interest Rates, Open Market Operations, absolute advantage, abundance, accelerator, activist fiscal policy, automatic stabilizers, bracket creep, capital, capital intensive, capitalist economies, central bank intervention, change in demand, change in quantity demanded, change in quantity supplied, change in supply, civilian labor force, comparative advantage, competition, complements, consumer price index, consumption expenditures, consumption function, contraction phase, cost, cost-of-living adjustments, cost-push inflation, crowding in, crowding out, currency, cyclical unemployment, data limitations, deficit, deficit spending, demand, demand curve, demand-pull inflation, diminishing relative value, diminishing returns, discount rate, discretionary fiscal policy, disequalibrium, disinflation, disposable income, economics, efficiency, elasticity of demand, embargo, entitlements, equation of exchange, equilibrium, equilibrium real interest rate, exchange, exchange rate, exchange value, expansion phase, fixed exchange rates, floating exchange rates,