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Glossary: Weekly Federal Reserve Statements

Consolidated Statement of Condition
of all Federal Reserve Banks
page 3

Factors Affecting Bank Reserves
page 15

Weekly Condition Report
of Large Commercial Banks
page 23

Basic Reserve Position, and Federal
Funds and Related Transactions of
Eight Major Reserve City Banks
in New York City
page 39

Weekly Summary of Banking
and Credit Measures
page 47

Federal Reserve Bank of New York

Glossary: Weekly Federal Reserve Statements is designed to provide a general
understanding of the meaning and relationship of each term used in the major
Federal Reserve statistical releases. It is not a substitute for the technical instruction booklets and forms the Federal Reserve issues to assist banks in reporting
data.

Consolidated Statement of Condition
of all Federal Reserve Banks

This statement—H.4.1(a)—is released by the Board of Governors in Washington,
D.C. each Thursday afternoon (Friday if Thursday is a holiday). Column 1 shows,
to the nearest million dollars, the condition of the 12 Reserve Banks at the end of
the previous day (Wednesday). Column 2 reports the change from the previous
Wednesday and column 3 the change from the Wednesday 52 weeks earlier. Section
11(a) of the Federal Reserve Act provides that the Board of Governors shall publish
once each week a statement showing the condition of each Reserve Bank and a consolidated statement for all Reserve Banks. A combined statement showing the condition of each Reserve Bank—H.4.1(b) and (c)—is released by the Board of Governors each Thursday afternoon with the Consolidated Statement.
A consolidated statement of condition appears, with a one-month lag, in the
Federal Reserve Bulletin, published monthly by the Board of Governors. In a
consolidated statement, offsetting assets and liabilities among the 12 Reserve
Banks are netted out; in a combined statement, the data for each Reserve Bank are
given and each of the accounts is reported gross, i.e., before the netting out of the
interoffice totals.

Contents

1(a)

CONSOLIDATED STATEMENT OF CONDITION OF ALL FEDERAL RESERVE BANKS
(In millions of dollars)

A S S E T S
Gold certificate account
Special Drawing Rights certif. accte
Cash
(1,686)
Loans
Acceptances—Bought outright
Held under repurchase agreements
Federal Agency obligations—Bought outright
Held under repurchase agreements
S. Government securities:
Bought outright--Bills
Certificates
Notes
Bonds
- Total bought outright
Held under repurchase agreements
Total U.S. Government securities
Total loans and securities
ash items in process of collection
Bank premises
Operating Equipment
Other assets 3_/
TOTAL ASSETS
L I A B I L I T I E S
Federal Reserve notes
Deposits: Member bank-reserves account
U.S. Treasury—general account
Foreign
Other 4/
Total deposits
Deferred availability cash items
Other liabilities and accrued dividends
TOTAL LIABILITIES

1/2/

(1,652)

Wednesday
July 23,
** 1975
11,620
500
320
1,999
673
76
5,083
211

82,548
820
83,368
91,410
7,257
298
2
2,900

iiflw

(1,686)

72,787
30,899
1,333
276
795
33,303
5,036
1,021
112,147

(3,338)

A C C O U N T S
C A P I T A L
Capital paid in
Surplus
Other capital accounts

+
+ 868
7
+ 76
1
+ 22

+
160
+
100
+
122
- 3,640
+
473
189
+ 1,496
117

- 2,928

—
—

+ 3,105
+ 1,664

+ 1,841
+
213

—
9

42,886
4,522

(3,338)

(1,652)

Change since
July 16,
July 24,
1975
1974

- 631
- 728"*
+
793
-m
—
+ 124
z.jBjT
mm

+
56
+
2
+ 1,723
+ 1,860

443
259
736
+ 52
+ 122
+ 651
- 626
117
. 535
-

6,927
2,872
1,668
22
63
4,455
443
184
+1,845

+
+

—
104

912
897
351

+X554
+
7
- -^7
380

+
+
+
-

32
53
70

Contingent liability on acceptances
purchased, for foreign correspondents
Figures in parentheses are the eliminations made in the consolidating process.
Excludes $438 million of securities sold, and scheduled to be bought back,
under matched sale-purchase transactions.
Includes $112 million securities loaned--fully secured- by U.S. Government
securities pledged with Federal Reserve Banks.
Includes assets denominated in foreign currencies.
Includes $6 million of certain deposits of foreign-owned banking institutions
held with member banks and redeposited in full with Federal Reserve Banks in
connection with voluntary participation by nonmember institutions in the
Federal Reserve System's program of credit restraint.
Estimated (San Francisco District).

MATURITY DISTRIBUTION OF LOANS AND SECURITIES. JULY 23, 1975
(Acceptances and securities held under repurchase agreements are classified as
maturing within 15 days in accordance with maximum maturity of the agreements*)

Acceptances
Within 15 days
16 days to 90 days
91 days to 1 year
Over 1 year to 5 years
Over 5 years to 10 years
Over 10 years
Total

1,995
4

1,999

168
403
178

749

U.S. Government
securities
Holdings
Weekly
1 changet

5,468
18,725
20,476
28,366
7,137
3^196
83,368

+ 374
85
-1,017

—
—
-728

Federal Agency
obligations
Holdings
Weekly
changes

237
276
532
2,544
1,144
561
5T29ZT

+
+
-

47
15
15
23
3

—

+ 21

Assets
Gold Certificate Account
Gold certificate credits held by the Federal Reserve Banks.* Some credits are
pledged with Federal Reserve Agents** as collateral for Federal Reserve notes
issued.***
Except for some actual gold certificates that Federal Reserve Banks use for
public education displays, all "gold certificates'' are bookkeeping credits.
* When the Treasury purchases gold and
needs to replenish its dollar balances, it
"monetizes" the gold. The Treasury issues
gold certificate credits to the Federal Reserve Banks and an equal amount in dollars is credited to its account at the Reserve
Banks. If the Treasury wishes to sell gold
that has already been monetized, it must
free the gold by redeeming gold certificate
credits issued to the Reserve Banks. When
redeeming credits, the Treasury pays by reducing its balances at the Reserve Banks.
In August 1971, the U.S. suspended
virtually all Treasury buying and selling of
gold. In 1972 and 1973, Congress raised
the U.S. official gold price and the
Treasury issued gold certificates against
the increased value of the U.S. gold stock.
In 1974, the Treasury monetized the last,
small, remaining amount of nonmonetized
gold.
On December 31, 1974, the 41-year old
legal prohibition against Americans buying, selling and holding gold ended, and, in
January 1975, the Treasury sold gold to the
public, redeeming gold certificates held by
the Reserve Banks.
** The Federal Reserve Agent is the Board
of Governors' representative at each Reserve Bank. The Agent and the Reserve
Bank have joint custody of the Bank's unissued Federal Reserve notes. To obtain the
release of notes, the Reserve Bank is required to pledge collateral at least equal to
the amount of notes it wishes to issue.
The Federal Reserve Act (Section 4)
specifies that the Board of Governors shall
designate one of the three "Class C" directors of each Federal Reserve Bank (directors appointed by the Board) as Chairman
of the Board of Directors and Federal
Reserve Agent.
*** Statutory minimum gold reserve requirements against Federal Reserve deposit liabilities and notes were abolished on
March 3, 1965 and March 18, 1968, respectively. However, each Reserve Bank
must maintain collateral equal to the
amount of its Federal Reserve notes outstanding. This collateral may be gold certificate credits or Special Drawing Rights

certificate credits, U.S. Government securities, or collateral received in making
loans. Most Federal Reserve Banks continue to pledge a portion of their gold certificate credits as collateral against these
Federal Reserve note liabilities.
Each Reserve Bank receives a share of
the total gold certificate credits in the account equal to the percentage of total
Federal Reserve notes outstanding that it
has issued. Redistribution of credits is
made on or about each January 15, beginning in 1976, to reflect changes in the
percentages of notes issued by individual
Reserve Banks during the previous year.
Until April 30, 1975, Federal Reserve
Banks used gold certificate credits to settle
daily amounts due one another from the
movement of checks and wire transfers of
securities and funds between districts. To
effect settlements, a pool of gold certificate
credits was established that was not available for use as a collateral against Federal
Reserve notes issued. With the ending of
the practice, the gold certificate credits in
the entire pool became available for pledging as a collateral against Federal Reserve
notes. Thus, at present, Federal Reserve
Banks settle amounts due one another with
"debit" and "credit" asset entries. Each
Reserve Bank records on its own Condition
Statement, in a separate "Interdistrict settlement account" item, the net balance
"due to" or "due from" other Reserve
Banks. The item appears directly below
"other assets" in the separate condition
statements, but does not appear on the
Consolidated Statement because the sum of
the "due to" and "due from" balances of
the 12 Federal Reserve Banks always nets
out to zero.
As transactions are made between Reserve Banks, each Bank's "Interdistrict
settlement account" is increased (debited
with a "due from" entry) or reduced
(credited with a "due to" entry) as appropriate, on a daily basis. "Due to" and "due
from" settlements are netted against one
another; there is no corresponding liability
adjustment. This asset item, therefore, is
reported as a negative number when "due
to" balances exceed "due from" balances.
Each year, on the last business day of
continued on next page

January, beginning in 1976, the cumulative
amounts in the "Interdistrict settlement
account" as of a business day between
January 15 and the last business day of the
month are "settled" by reallocating the
ownership of the U.S. Government securities and/or Federal agency securities held

in the System Open Market Account portfolio. Federal Reserve Banks having "due
to" balances "pay" Federal Reserve Banks
having "due from" balances by reducing
their holdings in the portfolio in favor of
those Reserve Banks with "due from"
balances.

2. Special Drawing Rights Certificate Account
Special Drawing Rights certificate credits held by the Federal Reserve Banks.*
* On January 1, 1970, the United States
received an initial allocation of $866.9
million of Special Drawing Rights (SDR)
from the International Monetary Fund. The
Treasury, through its Exchange Stabilization Fund—an account used for stabilization operations in foreign exchange markets
and for official purchases and sales of
gold—monetized $400 million of this allocation within a few months.
In monetizing, the Treasury issues to
the Federal Reserve Bank of New York
SDR certificate credits that are subsequently allocated among all 12 Reserve

Banks. In return the Treasury receives an
equal amount of dollars credited to its
Exchange Stabilization Fund account at
the New York Reserve Bank. This dollar
crediting is reflected as an increase in the
"special checking account of the Exchange
Stabilization Fund," included in "deposits: other" liability account, line 21.
On January 1, 1971, the United States
received its second SDR allocation from
the IMF—$716.9 million. A third allocation—$710.2 million—was received on
January 1, 1972. No further allocations of
SDR have been made since 1972.

3. Cash
Coin and currency on hand in the Federal Reserve Banks and branches, except gold
certificates and Federal Reserve notes. Virtually all of this item is coin; held in very
small amounts are U.S. notes, which are still issued by the Treasury, and other
paper currencies, such as silver certificates, which are being retired.
The Consolidated Statement excludes all Federal Reserve notes issued by one
Reserve Bank and held by another Reserve Bank from this item and the liability
account "Federal Reserve notes" (line 17). The amount excluded appears in parentheses to the left of column 1, lines 3 and 17.

4. Loans*
Credit granted by the Federal Reserve Banks,** almost exclusively to member
banks, at the borrower's initiative.
The following types of loans may be made by Federal Reserve Banks:
To Member Banks
(1) Advances on the bank's promissory note secured by U.S. Government securities
or certain Federal agency obligations. Maximum maturity: 15 days.
(2) Discounts of eligible paper. Maximum maturity: 90 days.
(3) Advances on the bank's promissory note secured by eligible paper or any obligations eligible for Federal Reserve Bank purchase. Maximum maturity: 90 days.
(4) Discounts of certain bankers' acceptances. Maximum maturity: 6 months.
(5) Discounts of agricultural paper. Maximum maturity: 9 months.
(6) Advances secured to the satisfaction of the Federal Reserve Bank. Maximum
maturity: 4 months. The interest rate charged on such loans cannot be less than
one-half percentage point higher than the prevailing discount rate.

Seasonal Credit
In April 1973, the Federal Reserve established a new borrowing privilege for member banks that demonstrate a seasonal need for funds and lack access to national
money markets. They can borrow for up to 90 days at the discount rate and renew
these loans if their seasonal need exceeds original expectations.
Borrowing under the seasonal privilege is ordinarily limited to the amount by
which banks' seasonal needs exceed 5 percent of average total deposits in the
previous calendar year.
Emergency Credit
Federal Reserve credit may also be extended for prolonged periods (such as for more
than eight weeks) to individual banks in exceptional circumstances, such as sustained deposit drains, impaired access to money market funds, or sudden deterioration in loan repayment performance. Under this category of lending, loans can
be in significant amounts (amounts that exceed, on average, the borrowing bank's
required reserves, for example), but at a special, higher discount rate.
The purpose of the special rate, which cannot exceed the rate established for
emergency loans to nonmember banks, is to limit any advantage a bank might
obtain through borrowing from the Federal Reserve rather than from the money
market and to encourage the borrowing bank to make those adjustments in its operations that will permit repayment of the loan in a reasonable period.
To Others
(1) Advances to foreign governments, central banks or monetary authorities secured
by gold. No maximum maturity is specified in the Federal Reserve Act.
(2) Advances to individuals, partnerships or corporations secured by U.S. Government or agency obligations. Maximum maturity: 90 days.
(3) In unusual and exigent circumstances, and when authorized by the Board of
Governors, discounts for individuals, partnerships or corporations of paper that
would be eligible for discounting if presented by member banks. No maximum maturity is specified in the Federal Reserve Act.
Banks usually borrow on their own promissory notes secured by U.S. Government securities.*** Under continuing lending agreements instituted by the Reserve
Banks in February 1971, member banks need not physically present a promissory
note. Borrowers may request an advance by telephone or wire. Many member banks
keep Government securities at their Reserve Bank or branch, thus making sure collateral is always immediately available. Reserve Banks may grant an advance even
without physical possession of the collateral if distance or poor transportation
facilities would make actual delivery difficult. In these cases, member banks may
pledge as collateral securities held in a safekeeping account at another member
bank.
The interest rate the Reserve Banks charge on loans is called the "discount rate"
and is payable when the loan is repaid. The discount rate is always expressed in
annual terms (i.e., a 365- or 366-day year). However, interest charges are computed on the basis of the number of days funds are actually borrowed. Thus,
charges on a 24-hour loan would amount to 1/365 of the discount rate. The discount rate is fixed by each Reserve Bank, subject to review and determination by
the Board of Governors.
* Loans are "discounts" or "advances."
"Discounts" are made when a member
bank presents customers' short-term commercial, industrial, agricultural or other
business paper for rediscounting. "Advances" are loans made on the borrowing
bank's own promissory note secured by
Government obligations, paper eligible for
discounting or other satisfactory collateral.

** The granting of credit by Federal Reserve Banks is authorized and limited by
the Federal Reserve Act—basic provisions
are in Sections 10(b), 13 and 13(a)—and
regulated by the Board of Governors'
Regulation A.
*** A maturity distribution of loans outstanding on the statement date appears
continued on next page

directly below the Consolidated Statement
on the H.4.1(a) release. Virtually all loans
appear in the first maturity category,
"within 15 days."
A more refined distribution would show
the bulk of borrowings maturing in one or

two days, reflecting the borrowing pattern
of the large city banks which account for
most of the dollar volume. As a separate
group, the borrowing of country banks
clusters at seven or eight days.

5. Acceptances
a. Bought Outright
Prime bankers' acceptances bought outright by the Federal Reserve Bank of New
York for its own account.*
b. Held Under Repurchase Agreements
Prime bankers' acceptances bought by the New York Reserve Bank for its own
account under agreements with nonbank dealers.** These agreements call for the
dealer to buy the acceptances back on a specified date (usually within 15 days) or
earlier at the dealer's option. The Reserve Bank also has the right to require repurchase any time before maturity of the agreement, but this right is rarely exercised.
* Bankers' acceptances are drafts or bills
of exchange that banks have "accepted" as
their own liabilities, in effect pledging their
credit on behalf of their customers. Those
acceptances of the largest and best known
banks are considered prime quality money
market instruments. In 1955, the Federal
Open Market Committee (FOMC) authorized the Federal Reserve Bank of New
York to deal in prime bankers' acceptances
for its own account.
The FOMC determines Federal Reserve
System policy on open market operations—
purchases or sales of U.S. Government
and Federal agency securities, bankers'
acceptances and foreign exchange. The
Committee consists of the seven members of
the Board of Governors and five Reserve
Bank presidents.
The New York Reserve Bank conducts
open market operations for the Federal
Reserve System with about 25 primary

dealers in Government securities and
bankers' acceptances. The manager of the
System Open Market Account is Executive Vice President in charge of the New
York Reserve Bank's open market operations and is appointed annually by the
FOMC to carry out its policy directives.
Ownership of the System Open Market
Account portfolio is allocated among all
the Reserve Banks, except for acceptances
and securities held under repurchase agreements, which are carried on the books of
the New York Reserve Bank. On the Combined Statement of Condition net purchases or sales of securities are reflected in
proportional increases or reductions in the
security holdings of each Reserve Bank.
** Dealers engaging in repurchase agreements with the New York Reserve Bank
receive, in effect, short-term loans.

6. Federal Agency Obligations
a. Bought Outright
Federal agency obligations bought outright by the Federal Reserve Bank of New
York for the System Open Market Account. Federal agencies established by law
primarily to implement the Government's farm and home lending programs, issue
obligations to finance their activities. Most agency securities are not guaranteed by
the U.S. Government but are direct obligations of the agencies.
A 1966 amendment to Section 14(b) of the Federal Reserve Act authorized Federal Reserve Banks to buy and sell Federal agency obligations. Until September
1971, however, the FOMC restricted the System Account manager to repurchase
agreements* when dealing in agency obligations. Authorization for outright purchases and sales was given to widen the base of System open market operations and
add breadth to the agency securities market.

b. Held Under Repurchase Agreements
Federal agency obligations bought under repurchase agreements with nonbank dealers in Government securities. Such agreements are used to provide a temporary and
self-reversing injection of reserves into the banking system.
* An agreement under which the System
Account manager buys a security from a
nonbank dealer under the condition that
the dealer repurchase the security on a
specified date (within 15 days), or earlier
at the dealer's or the Federal Reserve's
option. In April 1972, the FOMC authorized the System Account manager to in-

stitute competitive bidding when buying
securities under repurchase agreements.
Under competitive bidding, each dealer is
requested to present a schedule of rates the
dealer is willing to pay for various amounts
of credit. The System Account manager
selects the best bids presented.

7. U.S. Government Securities: Bought Outright*
a. Bills
b. Certificates—Special**
Other
c. Notes
d. Bonds
These lines give a breakdown of Treasury securities bought by the Federal Reserve
in the open market from primary dealers in Government securities, foreign official
accounts and the U.S. Treasury. Except for purchases in exchange for maturing
issues, direct purchases from the Treasury are infrequent, for very short periods,
and are for relatively small amounts.
The distinction between bills, certificates, notes and bonds is based essentially on
the maturity of the obligation. Bills are the shortest term Treasury obligation, are
sold at auction, on a discount basis, and may have maturities not to exceed one
year. Certificates—certificates of indebtedness of the Treasury, which would be
classified as "other"—also may have maturities not to exceed one year but differ
from Treasury bills in that certificates carry an interest coupon. Notes, which also
carry an interest coupon, have maturities of not less than one year nor more than
seven years. While bonds may be issued in any maturity, they are generally issued
with maturities in excess of seven years. They are the longest term Treasury obligations. Coupon-bearing issues may be sold at auction or at a set price.
(A maturity distribution of U.S. Government securities held by the System Account on the statement date appears directly below the Consolidated Statement on
the H.4.1(a) release.)
* Securities purchased by the Federal Reserve are carried on the books at maturity
value. See "other assets" (line 15) and its
footnote for the treatment of any premiums
paid on securities purchased. See "other
liabilities" (line 24) and its footnote for the
treatment of securities purchased at discount.
** When the Treasury borrows directly
from Federal Reserve Banks, it issues
"special certificates of indebtedness" to the

Reserve Banks for the amount of the loan
and receives a corresponding increase in its
general account (line 19). Such borrowing
is done infrequently and almost exclusively
to cover overdrafts on the Treasury's
account with the Federal Reserve Banks
immediately before quarterly tax payment
dates, when the Treasury's balances are
low and a large inflow of funds is soon to
take place. Such borrowing is recorded on
the "certificates—special" line (line 7b).

8. Total Bought Outright
The sum of lines 7a, b, c and d.*
footnotes on next page

* Included in the total are Government securities loaned to dealers. Such loans are
made to facilitate deliveries of securities by
the dealers. These loans are fully secured
by other Government securities the dealers

pledge with Reserve Banks. The amount of
such loans outstanding Wednesday night is
indicated in a footnote to the Consolidated
Statement,

9. U.S. Government Securities: Held Under Repurchase Agreements
U.S. Government securities (defined in line 7) purchased from nonbank dealers
under an agreement calling for the seller to repurchase them on a specified date
(within 15 days) or earlier at the dealer's or the Federal Reserve's option.
10. Total U.S. Government Securities*
The sum of lines 8 and 9.
* Securities held by the Reserve Banks
may be sold to dealers under a matched
sale-purchase agreement (so called "reverse
repos"). The dealers are required to sell
the securities back to the Reserve Banks on
the date specified in the agreement.
Typically, these contracts mature in a day

or two. Outstanding matched sale-purchase transactions on the date of the statement are indicated in a footnote. If a transaction has not been completed by Wednesday evening, the statistics include the
"sale." The purchase is included the following week.

11. Total Loans and Securities
The sum of lines 4 (loans), 5a and b (acceptances bought outright and held under
repurchase agreements), 6a and b (Federal agency obligations bought outright and
held under repurchase agreements) and 10 (total U.S. Government securities).
12. Cash Items in Process of Collection
Checks and any other item payable on demand which the Federal Reserve accepts as
a cash item (e.g., matured corporate and municipal coupons presented by banks,
negotiable orders of withdrawal) that have been received by Federal Reserve
Banks and, on the date of the statement, are being collected, including those being
transported to the banks on which they are drawn. Government checks, postal
money orders and food coupons, although classified as cash items, would not be
included here since such items are debited to the Treasury's account on the day
received.
(In the Consolidated Statement, cash items in transit from one Federal Reserve
Bank or branch to another are eliminated from "cash items in the process of collection" and from "deferred availability cash items" to avoid double counting of
items in the process of collection within the System. The amount appears in parentheses to the left of column 1, lines 12 and 23.)
13. Bank Premises
The value of the land and buildings of the Federal Reserve Banks and branches, less
an allowance for depreciation on the buildings.

14. Operating Equipment
The total value, less an allowance for depreciation, of the equipment of the Federal
Reserve Banks and branches with an individual book value of $10,000 or more, such
as computers. (Equipment with a book value of less than $10,000 is counted in the
Federal Reserve Banks' current expenses.)

15. Other Assets*

Miscellaneous assets, including accumulated interest** and other accounts receivable, premiums paid on securities bought,*** and assets denominated in foreign
currencies such as those acquired through "swap" drawings.****
The last item is listed separately in the Consolidated Statement that appears in
the Federal Reserve Bulletin,
* Since October 8, 1974, this item has
included a Federal Reserve Bank of New
York loan to the Federal Deposit Insurance Corporation (FDIC). The FDIC, as
receiver for Franklin National Bank, assumed the Federal Reserve loan to the insolvent bank, amounting to $1,723 billion,
and agreed to repay the Federal Reserve
over a three-year period as collateral supplied by Franklin to back the loan was
liquidated.
** This item represents the daily accumulation of accrued interest earned on: Government securities owned, Government
securities held under repurchase agreements, loans made to member banks, loans
made to central banks and foreign currency investments.
*** The amount paid by the Federal Reserve above the face value of the securities
it has purchased. Each day part of this
amount is amortized into earnings. (This
item is decreased and the ' 'other capital
accounts" (line 28) decreased by an equal
amount.) This amortization is at a uniform
rate to exhaust the premium on the maturity date of each security.
A security purchased at a premium is

treated on the books in this way because at
maturity the Federal Reserve collects only
the face amount of the security (i.e., over
the life of the security its value gradually
declines).
The premium paid on securities bought
under repurchase agreements is not amortized. The premium is, in effect, paid back
to the Federal Reserve when the securities
are repurchased by the dealer. The negotiated price includes the premium.
**** A "swap" drawing is a reciprocal
credit exchange between the Federal Reserve and a foreign central bank where the
foreign central bank exchanges on request
its own currency for dollars up to a
maximum amount over a limited period of
time, such as three months or six months.
In a swap drawing, the "other assets" item
is increased and the "deposits: foreign"
liability item (line 20) increased by an
equal amount. For an explanation of the
use of swap drawings since 1962, see the
semiannual reports of "Treasury and
Federal Reserve Foreign Exchange Operations," which appear in the Federal Reserve Bulletin and the Federal Reserve
Bank of New York Monthly Review usually
in March and September of each year.

16. Total Assets
The sum of lines 1 (gold certificate account), 2 (SDR certificate account), 3 (cash),
11 (total loans and securities), 12 (cash items in process of collection), 13 (bank
premises), 14 (operating equipment) and 15 (other assets).

Liabilities
17. Federal Reserve Notes
The total amount of Federal Reserve notes in circulation, including those held in
commercial bank vaults and those held by the U.S. Treasury. This item excludes
notes held in the vaults of Reserve Banks and branches and canceled notes forwarded to the Treasury for destruction. (In the Consolidated Statement, the notes of
one Reserve Bank held by another Reserve Bank are eliminated. The amount appears in parentheses to the left of column 1, lines 3 and 17.)

18. Deposits: Member Bank Reserve Accounts
Demand balances in reserve accounts of member banks.

19. Deposits: U.S. Treasury—General Account
Demand balances in the general checking account of the Treasury with Federal
Reserve Banks and branches. Virtually all of the U.S. Government's disbursements
are made from these accounts.*
* The Treasury maintains part of its operating cash balance in "Tax and Loan"
accounts at about 13,000 commercial
banks. A portion of tax receipts and, on
occasion, funds from the sale of new
Treasury obligations are deposited by the
Treasury in these accounts to moderate the

impact of Treasury borrowing and tax collections on bank reserves. As funds are
needed for disbursements, the Treasury
issues "calls" to commercial banks—
through the district Reserve Banks—directing them to transfer funds to the Treasury's account at the Reserve Banks.

20. Deposits: Foreign*
Demand balances of foreign central banks, the Bank for International Settlements,
and a few foreign governments.
* While transactions for these accounts
are handled by the New York Reserve

Bank, the deposit liabilities are allocated
among all Reserve Banks.

21. Deposits: Other
Includes demand balances of international organizations such as the International
Monetary Fund (IMF), United Nations, and International Bank for Reconstruction
and Development (World Bank); the special checking account of the Exchange
Stabilization Fund;* demand balances of "Edge Act" (international banking and
financial) corporations held as reserves;** and demand balances of certain U.S.
Government agencies.
* The account that holds the dollars' credited to the Exchange Stabilization Fund in
monetizing SDR (see asset item, "special
drawing rights certificate account" line 2
and corresponding footnote).
** The "Edge Act" is the 1919 amendment to the Federal Reserve Act—Section 25(a)—that empowers the Board of
Governors to charter corporations for the
purpose of engaging in the financing of international commerce. The amendment is

commonly referred to as the "Edge Act"
after its sponsor, Senator Walter E. Edge
of New Jersey. Edge Act corporations are
granted certain powers subject to rules and
regulations of the Board of Governors.
Regulation K, first issued by the Board in
1920, governs Edge corporation activities.
The regulation specifies that deposits of
such corporations are subject to reserve requirements and their required reserves
must be held in cash or in demand balances at Federal Reserve Banks.

22. Total Deposits
The sum of lines 18 (member bank reserves), 19 (U.S. Treasury—general account),
20 (foreign) and 21 (other).

23. Deferred Availability Cash Items
Checks and other cash items (see line 12 under assets) that, although received by the
Reserve Banks, are not due to be credited for one or two days to the accounts of the
depositing banks. The Reserve Banks defer credit according to a schedule that allows time for out-of-town checks to be mailed or carried to the banks on which they
are drawn. After a maximum of two business days, the member bank's reserve
account is credited whether or not the item is collected from the bank on which it is
drawn.

24. Other Liabilities and Accrued Dividends
Includes liabilities for statutory dividends on paid-in Federal Reserve Bank capital
stock (all owned by member banks) accrued between semiannual payment dates (the
last business day of June and December); unearned discount on securities bought
outright,* sundry items payable, and accrued expenses.
* The amount paid by the Federal Reserve
below the maturity value of the securities
and bankers' acceptances it has purchased.
Each day part of this amount is transferred to the earnings account to eliminate
the discount on the maturity date. (This
item is decreased and the "other capital
accounts" item (line 28) increased by an
equal amount.)
A security or acceptance purchased at a
discount is treated on the books this way
because at maturity the Federal Reserve
collects more than it paid for the instrument. Thus, the difference between what it
paid and what it will receive at maturity
represents a discount not yet earned.

The discount on securities bought under
repurchase agreements is not accumulated
into earnings. It is paid back to the dealer
when the securities are repurchased from
the Federal Reserve.
The discount on acceptances bought under repurchase agreements is treated differently. It is accumulated daily into earnings—the "other capital accounts" item
(line 28)—to eliminate the discount on the
termination date of the repurchase agreements. If the dealer repurchases an acceptance before termination, the Federal Reserve gives a rebate of the remaining
discount.

25. Total Liabilities
The sum of lines 17 (F.R. notes), 22 (total deposits), 23 (deferred availability cash
items) and 24 (other liabilities and accrued dividends).

Capital Accounts
26. Capital Paid In
Amount paid for Federal Reserve Bank capital stock. All member banks are shareholders by law (Federal Reserve Act, Section 5) and must subscribe to shares of
the Reserve Bank of their district in an amount equal to 6 percent of their own paidup capital stock and surplus. Of this amount, one-half (3 percent) must be paid in
and one-half (3 percent) remains subject to call by the Board of Governors. When a
member bank changes its own capital or surplus, its ownership of Reserve Bank
stock must be altered accordingly.

27. Surplus
After necessary expenses are paid and the statutory cumulative 6 percent dividend
on the paid-in capital stock is met, Reserve Banks are required by law to pay the net
earnings into a surplus fund. (At the end of 1964, the Board of Governors
continued on next page

concluded t h a t the growth of the capital, accumulated surplus a n d net earnings
of the Reserve Banks warranted halving the surplus of the Reserve Banks from the
total of subscribed capital, (6 percent) to the level of paid-in capital (3 percent). (See
item 26.)

28. Other Capital Accounts
Unallocated net earnings since the last payment of dividends to stockholders* and
payment of interest to the Treasury on Federal Reserve notes outstanding.**
* Dividends are paid in semiannual instalments, on the last business day in June
and the last business day in December.
** Each Reserve Bank pays part of its accumulated net earnings to the Treasury as
"interest on Federal Reserve notes outstanding" on the second business day of
each month, except in January when
payments are made on the first business
day. The payments reduce this account and
increase the U.S. Treasury's general account (line 19) at the Reserve Banks. Section 16 of the Federal Reserve Act grants
the Board of Governors authority to levy an
interest charge on outstanding Federal
Reserve notes not fully covered by gold

certificate reserves. This authority has been
used since 1947. The purpose of the interest charge is to transfer to the Treasury any
excess earnings of the Reserve Banks after
expenses, dividends and adjustments that
are necessary to make surplus equal to
paid-in capital. Prior to 1933, each Reserve Bank was required to pay a franchise
tax to the Government, which accomplished the same end. From 1933 to 1946,
the Reserve Banks did not transfer excess
earnings but used these earnings to restore
their surplus accounts, which had been
depleted by mandatory purchases of the
capital stock of the Federal Deposit Insurance Corporation (FDIC) in 1933.

29. Contingent Liability on Acceptances Purchased for Foreign Correspondents
The total amount of the Reserve Banks' liability on acceptances purchased for the
accounts of foreign central banks. This potential liability arises from the Reserve
B a n k s ' guarantee that such acceptances will be paid at maturity.*
* On November 22, 1974, the Board of
Governors terminated the System guarantee on acceptances purchased by the New
York Bank for official foreign accounts.
The practice of guaranteeing acceptances was adopted more than fifty years
ago in conjunction with reciprocal relationships with other central banks. It was
designed to help encourage the development of acceptance financing in the United
States and to provide an investment outlet
for the funds of foreign monetary authorities. The acceptance market subsequently
became well established. Foreign holdings
of guaranteed acceptances, after remaining
stable at moderate levels for many years,
rose rapidly in 1974, increasing by $1.5
billion to over $2 billion in the first ten
months of that year.
The Board's action reflected concern
over the desirability of continuing the
Federal Reserve's guarantee, which had
been likened to a United States Government guarantee, on a private credit instrument purchased by foreign central banks
and monetary authorities.
Until 1921, the Federal Reserve did not

charge central banks for its guarantee (in
effect, an insurance service). Maintaining a
demand deposit with the Federal Reserve
was considered sufficient compensation.
This policy was changed when the Netherlands Bank contended that maintaining a
demand deposit was an arbitrary form of
payment. From 1921 to 1974, a commission was charged for the guarantee. The
charge was VA of 1 percent on the face
amount of the acceptance until 1926; Vs
of 1 percent after 1926.
The Federal Reserve had to make only
one payment under the guarantee. During
the U.S. banking crisis in 1933, the System
assumed the liability for $634,000 of unpaid acceptances from foreign accounts.
These acceptances were all collected in full
in 1933 and 1934. The Federal Reserve's
"loss" consisted of $136.50 in uncollected
protest fees and $6.00 in interest.
Although this item appears below "capital accounts," it is really a memorandum
item not included when balancing "total
assets" with "total liabilities and capital
accounts."

Factors Affecting Bank Reserves

This release—H.4.1—itemizes the factors affecting member bank reserves that stem
from the monetary activities of the public, the Treasury, the banks themselves and
the Federal Reserve. The release is a rearrangement of the Consolidated Statement
of Condition of all Federal Reserve Banks, plus a partial Treasury balance sheet
containing the Treasury's monetary accounts. It is divided into two sections: one
showing the factors supplying bank reserves; the other, the factors absorbing reserves. Increases in factors supplying reserves (e.g., securities bought by the System
account, member bank borrowings) produce increases in bank reserves and
decreases produce declines. Increases in factors absorbing reserves (e.g., currency
in circulation) produce declines in bank reserves and decreases produce increases.
A separate section, "member bank reserves,,, shows the net effect of all factors
on total, required, and excess reserves of member banks.
This statement shows averages of daily figures for the statement week, which are
more useful for analyzing the causes of changes in bank reserves than figures for a
specific date. The right hand column, which gives Wednesday night figures, can be
traced directly to the Consolidated Statement. The monthly Federal Reserve Bulletin contains a time series on factors affecting reserves showing daily averages for
each week and each calendar month as well as Wednesday night and last-day-ofmonth figures.

Contents
Line

Page

30a

30b

31a

31b

32a

32b

34
35

17
18

46a

46b

FEDERAL RESERVE
Factors Affecting Bank Reserves and
Condition Statement of F.R. Banks
H.4.1

For immediate release
July 24, 1975

Member bank reserves,
Reserve Bank credit,
and related items
Reserve Bank credit:
U.S. Government securities-Bought outright—System account
Held under repurchase agreements
Federal Agency obligations-Bought outright
Held under repurchase agreements
Acceptances-Bought outright
Held under repurchase agreements
Loans-Total member bank borrowing
Includes seasonal borrowing of:
Other borrowing
•Float
Other F.R. assets
Total Reserve Bank credit
Gold Stock
Special Drawing Rights certif. acct.
Treasury currency outstanding

Currency in circulation **
Treasury cash holdings
**
Treasury deposits with F.R. Banks
Foreign deposits with F.R. Banks
Other deposits with F.R. Banks 4/
Other F.R. liabilities and capilal
Member bank reserves:
With Federal Reserve Banks
Currency and coin
Total reserves held
Required reserves
Excess reserves
NOTE

Averages of d a l l y f i g u r e s
Week ended Change from week ended Wednesday
July 23,
J u l y 16,
J u l y 24,
July 23,
1975 *
L975
1974
1975 *
1/
(In m i l l i o n s of d o l l a r s )
| 1/3/
82,766
117

587
90

+ 2,191
18
-

82,548
820

+ 1,506
- 111

5,083
211

5,084
30

680
11

6
11

382
19

+
+

180
3

287
72
470

1,859
___.3J.22
94,051
11,620
500
9,630
115,801
81,743
370
1,370
240
690
3,148
87,561
28,240
6,718
34,958
34,693
265

+
+

1,999
21

172
56
14
38
241

81,734
370
1,333
276
795
3,181
87,689

723
637
86
106
192

- 2,613
+
154
- 2,459
- 2,609
+
150

30,899
6,718
37,617
34,693
2,924

409

673
76

+ 7,302
+
100
- 1,351
43
67
- 123
+ 5,819

---

2,221
3,200
96,831
11,620
500
9,637
118,588

12
481

+
+

512

48
_ 3,259
- 136
- 168
+ 1,725
+ 2,329
+
53
+
100
+
723
+ 3,206

+
+

A net of $20 million of surplus reserves were eligible to be carried forward
from the week ended July 16, into the week ending July 23.
On July 23, 1975, marketable U.S. Government securities held in custody by
the Federal Reserve Banks for foreign and international accounts were $41,423
million, an increase of $368 million for the week.
Net of $462 million, daily average, matched sale-purchase transactions outstanding
during the statement week.
Excludes $438 million of securities sold, and scheduled to be bought back, under
matched sale-purchase transactions.
Includes $112 million securities loaned—fully secured by U.S. Government securities
pledged with Federal Reserve Banks.
Includes $6 million of certain deposits of foreign-owned banking institutions held
with member banks and redeposited in full with Federal Reserve Banks in connection
with voluntary participation by non-member institutions in the Federal Reserve
System's program of credit restraint.
Estimated (Treasury's Figures).
Estimated (San Francisco District).

30a. Reserve Bank Credit:
U.S. Government Securities—Bought Outright—System Account
Equals line 8 of Consolidated Statement.

30b. U.S. Government Securities—Held Under Repurchase Agreements*
Equals line 9 of Consolidated Statement.
* Repurchase agreements supply reserves
for only a limited period of time since re-

purchase agreements call for dealers to buy
back the securities within 15 days.

31a. Federal Agency Obligations—Bought Outright
Equals line 6a of Consolidated Statement.

31b. Federal Agency Obligations—Held Under Repurchase Agreements
Equals line 6b of Consolidated Statement.

32a. Acceptances—Bought Outright
Equals line 5a of Consolidated Statement.

32b. Acceptances—Held Under Repurchase Agreements
Equals line 5b of Consolidated Statement.

33. Loans
a. Total Member Bank Borrowing
b. Includes Seasonal Borrowing of:
c. Other Borrowing
The sum of lines 33a, b and c equals line 4 of Consolidated Statement.
"Includes seasonal borrowing of" refers to the borrowings by member banks
from Federal Reserve Banks to meet specific seasonal needs for funds. (For an
explanation of this item, see line 11 of Weekly Summary of Banking and Credit
Measures.)
"Other borrowing" refers to the borrowing of foreign monetary authorities, individuals, partnerships or corporations. (For an explanation of this item, see line 4
of Consolidated Statement.)

34. Float
Checks sent to the Reserve Banks for collection are credited to the depositing bank's
reserve account according to a schedule that allows time for the checks to be presented to the banks on which they are drawn. The maximum deferral is two business days. The member bank's account is credited whether or not the checks have
reached the banks on which they are drawn. Because it may take longer than two
days to process and collect some checks presented for collection, some member
banks receive credit in their accounts for these checks before the banks on which the
checks are drawn lose reserves. This "extra" amount of reserves in the banking
system is called Federal Reserve float.
continued on next page

The volume of Federal Reserve float is computed by subtracting deferred availability cash items from cash items in process of collection (line 12 less line 23 on the
Consolidated Statement of Condition). Line 12 represents the total amount of items
that are in the process of collection. Line 23 represents the amount that is not yet
credited to a reserve account. The difference, therefore, represents the amount of
items that the Federal Reserve has not yet collected but has already credited.
35. Other F. R. Assets*
The sum of other assets, bank premises and operating equipment (equals lines 13,
14 and 15 of Consolidated Statement).
* The most notable changes in this account are (1) the accrual and payment of
interest earned on assets and (2) the buying
and selling of foreign currencies.
(1) As the Federal Reserve Banks accrue interest on assets such as Government
securities and loans to member banks,
there is no net reserve effect since the accrual entry in this asset account is offset by
an equivalent rise in "other capital accounts." When the Treasury pays the Federal Reserve Banks interest earned on their
Government securities holdings, the accrued interest is deducted, resulting in a
decline in "other assets." Deposits of the
U.S. Treasury (line 19 of Consolidated
Statement) are reduced by the same
amount, reflecting the Treasury's payment
of the interest.
(2) Federal Reserve holdings of foreign
currencies are included in this account.
When the Federal Reserve buys foreign

currencies, "other assets" increase and reserves of the commercial banking system
tend to increase. The Federal Reserve pays
with checks drawn on itself. Sellers deposit
these checks in U.S. banks, which send
them to a Federal Reserve Bank for payment. The Federal Reserve credits the
reserve accounts of the depositing banks,
thus increasing member bank reserves.
When the Federal Reserve sells foreign
currencies, "other assets" decrease and
bank reserves tend to decrease. Purchasers
pay by drawing on balances at banks in
this country. Upon receipt of payment, the
Federal Reserve reduces the reserve
account of the banks on which the checks
are drawn.
System purchases and sales of foreign
currencies are made by the Federal Reserve Bank of New York, usually on behalf of, or in cooperation with, foreign
central banks. New York City banks with
overseas branches are the primary market
for System purchases and sales.

36. Total Reserve Bank Credit
The sum of lines 30a through 35 inclusive.
Total Reserve Bank credit is the sum of factors affecting member bank reserves
that are under the control of the Federal Reserve.
The System exercises its most direct controls on two components of Reserve Bank
credit—its holding of securities and its lending to member banks. The other components—Federal Reserve float and other Federal Reserve assets—are controlled
less directly.
37. Gold Stock*
The "monetary'' or "Treasury" gold stock of the United States.
Consists of:
(a) Monetized gold—measured by the total of gold certificate credits issued by
the Treasury to the Federal Reserve Banks (line 1 of Consolidated Statement).
(b) Nonmonetized gold—against which no gold certificate credits have been
issued by the Treasury.**
Only changes in the Treasury gold stock affect bank reserves.***
The value of the gold stock is carried on the books of the Treasury at the official U.S. Government gold price of $42.22 a troy ounce, established by Congress
in 1973.

* From 1956 to 1972, the monetary or
Treasury gold stock included gold sold to
the U.S. by the International Monetary
Fund with the right of repurchase. During
this period, the IMF occasionally sold gold
to the U.S. for dollars used to purchase
income-earning U.S. Treasury securities.
Under the terms of these sales, the same
quantity of gold could be repurchased by
the IMF upon termination of the investment. In February 1972, both parties
agreed to end this arrangement and the
U.S. "sold" back to the IMF the $400 million in gold (at $35 per ounce) acquired
under these transactions.
From 1965 to 1972, the monetary or
Treasury gold stock included the $144
million gold deposit of the IMF at the
Federal Reserve Bank of New York. In
February 1972, that gold deposit was also
turned back to the IMF.
** See footnotes to line 1 of Consolidated
Statement for additional information on

Treasury monetization and nonmonetized
gold.
*** The Treasury gold stock differs from
the "total" gold stock of the United States.
The total gold stock, which is published
monthly in the Federal Reserve Bulletin
with a one-month lag, consists of the
Treasury gold stock plus gold in the
Exchange Stabilization Fund, a Treasury
account used for stabilization operations in
foreign exchange markets and as a conduit
for offical purchases and sales of gold. In
December 1974, the Treasury monetized
all of the remaining gold in its Exchange
Stabilization Fund. Since then, there has
been no numerical difference between the
two gold stock measures.
Both the Treasury and total gold stock
measures exclude:
(a) The United States' gold subscription to the International Monetary Fund.
(b) Gold held under earmark at the
Federal Reserve Bank of New York for
foreign and international accounts.

38. Special Drawing Rights Certificate Account
Equals line 2 of Consolidated Statement.

39. Treasury Currency Outstanding
Consists of coin and that currency for which the United States has legal responsibility (but not including Federal Reserve notes) held by the public, financial institutions, Federal Reserve Banks* and the Treasury itself.
This item consists primarily of coin.** The only United States currency currently authorized for issue is United States notes. The books of the Treasury carry
approximately $323 million of United States notes outstanding; the amount of such
notes outstanding may not be increased beyond this sum. Included in Treasury
currency outstanding, however, are outstanding currencies no longer being issued
and currencies originally issued by Federal Reserve Banks and national banks for
which the United States has assumed liability. These currencies include Federal
Reserve notes issued before July 1, 1929 (large size), Federal Reserve Bank notes,
national bank notes, gold certificates issued before the 1934 series, silver certificates
and Treasury notes of 1890.
* Excludes gold certificates, series of 1934,
which are issued only to Federal Reserve
Banks and are not in circulation.

** Includes a very small amount of standard silver dollars.

40. Currency in Circulation
The amount of currency and coin held outside the Treasury and the Federal Reserve
Banks. This item consists primarily of Federal Reserve notes issued on and after
July 1, 1929 by the Federal Reserve Banks. This total includes cash held in the
vaults of all commercial banks.*
* To obtain the "currency outside banks"
component of the money supply, vault cash

of all commercial banks must be subtracted from currency in circulation.

41. Treasury Cash Holdings*
Any currency and coin held by the Treasury in its own vaults. Includes silver bullion, silver dollars and nonsilver coinage metal.
* The Treasury cash holdings item represents the funds that the Treasury has at its

disposal without writing checks on its
Federal Reserve or Tax and Loan accounts.

42. Treasury Deposits with F.R. Banks
The U.S. Treasury—general account (line 19 of Consolidated Statement).

43. Foreign Deposits with F.R. Banks
Equals line 20 of Consolidated Statement.

44. Other Deposits with F.R. Banks
Equals line 21 of Consolidated Statement.

45. Other F.R. Liabilities and Capital
The sum of capital, surplus, other capital accounts, and accrued dividends (lines
24, 26, 27 and 28 of Consolidated Statement).*
* To interpret changes in this account, see
line 28 of Consolidated Statement and the
corresponding footnote on page 14.

46a. Member Bank Reserves: With Federal Reserve Banks
Demand balances of member banks with their district Reserve Banks.
This item is the difference between all the factors supplying reserves (lines 30a
through 39) and all the factors absorbing reserves (lines 40 through 45).

46b. Member Bank Reserves: Currency and Coin
Currency and coin held by member banks in their vaults or being transported to or
from a Federal Reserve Bank.
The figures on the H.4.1 release are estimates and are based on close-of-business
figures for the seven-day reserve computation period (Thursday through Wednesday) two weeks prior to the statement date.

47. Total Reserves Held
The sum of lines 48 and 49.

48. Required Reserves
The amount of reserves member banks must hold against their net demand deposits,* time and savings deposits,** and certain other liabilities, such as
Eurodollar borrowings,*** and funds received from affmates' sales of commercial paper.****
Required reserves are calculated by applying the percentages set by the Board of
Governors (Regulation D) to the classes of liabilities noted above. These percent-

ages are applied to the average daily close-of-business balances for a seven-day
period Thursday through Wednesday.
To aid member banks in determining the amount of reserves required against
these classes of liabilities, in any given statement week, the Board of Governors in
September 1968 authorized member banks to use the average daily figures computed two statement weeks earlier. Thus, reserves required in any given week are
based on average daily liability data for the period ending two weeks earlier. The
same procedures apply to a member bank's use of vault cash to meet reserve
requirements.
A member bank may carry forward an excess or deficiency of reserves of not
more than 2 percent of the amount required into the following statement week. The
net amount of carryovers into the current statement week is reported in the first
footnote at the bottom of the H.4.1 release.
If a member bank's reserves are still deficient, the bank becomes subject to a
penalty on the deficiency at a rate 2 percentage points above the discount rate.
* Net demand deposits equal total demand
deposits minus cash items in the process of
collection and demand balances due from
domestic commercial banks.

at the expiration of a specified period of time, and any withdrawal before maturity results in a substantial
interest penalty.

** Time deposits consist of:
(a) certificates of deposit—deposits evidenced by negotiable or nonnegotiable instruments providing for a
maturity not less than 30 days after
the date of deposit.
(b) time deposits open account—balances which may be added to or
withdrawn in accordance with a
written contract providing that maturity shall not be less than 30 days
after the date of deposit.
(c) savings deposits—deposits of individuals, certain nonprofit organizations, the United States, or any
state or political subdivision thereof
with respect to which the bank may
require that 30 days' notice of withdrawal be given. This provision is
not generally invoked.
Savings deposits have no specified maturity. All other time deposits mature at a specified date or

*** Eurodollars are dollar deposits with
U.S. and foreign banking offices outside
the United States. When these funds are
borrowed by member banks—essentially
the large banks with overseas branches—
the member banks enter the receipt of the
funds on their books as "liabilities due to
foreign branches." Such liabilities (Eurodollar borrowings) are subject to a reserve
requirement. A reserve requirement also
applies to assets acquired by the overseas
branch of a member bank from domestic
offices of the member bank and loans
made by the overseas branch of a member
bank to U.S. residents.
**** A corporation that controls a member bank (a bank holding company) can
acquire ownership of certain nonbank
businesses closely related to banking. If the
holding company or a nonbank affiliate
borrows funds and makes the funds available to the member bank, these funds are
subject to a reserve requirement.

49. Excess Reserves
This item is computed by subtracting required reserves from total reserves. Excess
reserves represent the funds banks have that can be invested in earning assets.

50. Note:
The Federal Reserve holds deposit balances, U.S. Government securities and earmarked gold as a service for foreign governments, central banks, and official international and regional organizations.
Marketable U.S. Government securities (only Treasury bills, certificates of indebtedness, notes and bonds, including repurchase agreements in these securities)
held in custody for these accounts as of the previous day (Wednesday) and the
change in holdings for the week are reported in a footnote to the H.4.1 release.
continued on next page

The Federal Reserve also holds in custody for these foreign and international
accounts "nonmarketable" U.S. Government securities payable in dollars and in
foreign currencies. These holdings are not reported on the H.4.1 release. However,
the month-end total of marketable and nonmarketable U.S. Government securities
held in custody is reported in the Federal Reserve Bulletin with a one-month lag.
Nonmarketable securities cannot be sold by one official account to another or sold
in the open market. They can be purchased from and redeemed by the Treasury
only.

Weekly Condition Report
of Large Commercial Banks

This section of the glossary explains the terms used in three different Federal Reserve
statements whose format and items are substantially identical. These are:
1. Weekly Condition Report of Large Commercial Banks and Domestic Subsidiaries,
the H.4.2 statistical release of the Board of Governors of the Federal Reserve
System,
2. Weekly Condition Report of Large Commercial Banks in New York and Chicago,
the H.4.3 statistical release of the Board of Governors,
3. Assets and Liabilities of 12 Weekly Reporting Banks in New York City, the release of the Federal Reserve Bank of New York.
The defined items are treated as they appear in the statements. For ease of reference each of the items in the sample statement (page 24) is indexed by page number.
The Board's H.4.3 statement, released each Thursday afternoon, shows in aggregate the principal assets and liabilities of weekly reporting banks in New York City
and Chicago separately as of the preceding night. Changes in the accounts from a
week earlier and a year earlier are also shown by city.
A report on the assets and liabilities of the 12 weekly reporting banks in New York
City as of the preceding night is released simultaneously by the Federal Reserve Bank
of New York.
Each Wednesday, the Board of Governors, in its H.4.2 release, reports asset and
liability data for weekly reporting banks in all Reserve districts as of the prior Wednesday. In addition to countrywide totals, the statement provides totals by Reserve
district for each of the reported assets and liabilities.
The aggregate condition statements of reporting banks in New York City, reporting banks outside New York City and all reporting banks in the country are published
with a one-month lag in the Federal Reserve Bulletin. Data are given for each week
of the month, each week of the prior month and each week of the like month a
year earlier.
The "Large Commercial Banks" referred to in the H.4.2 and H.4.3 releases are
banks that had total deposits of $100 million or more on December 31, 1965.

Contents
Line

Page

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

25
25
26
26
26
27
27
27
28
28
28
28
29
29
29
29
30
30
30
31
31
31
31
32
32
32
33
34
35
35
35
35
36
36
36
36
36
37

25
26
27
28
29
30
31
32
33
34
35
36
37
38

FEDERAL

RESERVE

statistical

release

For l B n e d l « . Release
July 24, 1975

WEEKLY CONDITION REPORT Of

LARGE COMMERCIAL

BANKS I N NEW YORK AND

CHICAGO

kEU V&lK CITY

A S S E T S

86,916
L LOANS AND INVESTMENTS, (GROSS)
EDERAL FUNDS SOLD AND S E C U R I T I E S
1,482
PURCHASED UNDER AGREEMENTS TO RESELL—TOTAL
COMMERCIAL BANKS
1 ,032
BROKERS AND DEALERS
224
INVOLVING U . S . TREASURY SECURITIES
INVOLVING OTHER S E C U R I T I E S
OTHERS
226
HER LOANS — 1 0 T A L
69,359
36,773
COMMERCIAL AND I N D U S T R I A L LOANS
AGRICULTURAL LOANS
60
LOANS TO BROKERS AND DEALERS FOR PURCHASING
OR C A R R Y I N G — U . S . TREASURY SECURITIES
772
OTHER S E C U R I T I E S
2,4*4
OTHER LOANS FOR PURCHASING OR CARRYING—
U . S . TREASURY S E C U R I T I E S
30
OTHER S E C U R I T I E S
450
LOANS TO NON-BANK F I N A N C I A L I N S T I T U T I O N S
SALES F I N A N C E , PERSONAL F I N A N C E , E T C .
3,046
OTHER
7,934
EAL ESTATES LOANS
7,445
OANS TO DOMESTIC COMMERCIAL BANKS
1,170
LOANS TO FOREIGN COMMERCIAL BANKS
2,467
CONSUMER INSTALMENT LOANS
2,539
LOANS TO FOR. G O V T S . , O F F I C I A L I N S T S . , E T C .
512
OTHER LOANS
3,657
S . TREASURY S E C U R I T I E S — T O T A L
7,000
TREASURY B I L L S
1,629
TREASURY C E R T I F I C A T E S OF INDEBTEDNESS
TREASURY NOTES AND U . S . BONDS MATURING—
W I T H I N 1 YEAR
607
1 YEAR TO 5 YEARS
3,938
AFTER 5 YEARS
826
HER S E C U R I T I E S — T O T A L
9,07 5
OBLIGATIONS OF STATES AND P O L I T I C A L S U B D I V I S I O N S —
TAX WARRANTS AND SHORT-TERM NOTES AND B I L L S
1,458
ALL OTHER
5,106
OTHER BONDS, CORPORATE STOCKS, AND SECURITIES
P A R T I C I P A T I O N C E R T I F I C A T E S IN F E D . AGENCY LOANS
534
ALL OTHER ( I N C L U D I N G CORPORATE STOCKS)
1,977
CASH ITEMS IN PROCESS OF COLLECTION
10,601
RESERVES WITH FEDERAL RESERVE BANKS
6,753
CURRENCY AND COIN
515
BALANCES WITH DOMESTIC BANKS
5,371
INVESTMENTS I N S U B S I D I A R I E S NOT CONSOLIDATED
798
OTHER ASSETS
12,547
TOTAL A S S E T S / L I A B I L I T I E S
123,501
L I

A I

L I

DEMAND DEPOSITS - TOTAL
I N D I V I D U A L S . PARTNERS
STATES AND P O L I T I C A L
U . S . GOVERNMENT
DOMESTIC INTERBANK —

T I

- 1 ,601

665
843

171

•

7
S55
462
2

81
33

•

~
"
-•

12
92
10
200
37
152

1
10
76 3
819
•
11
218
•
3
130
- 3 ,517

COMMERCIAL
MUTUAL SAVINGS

F O R E I G N — G O V T S . , O F F I CIAL INSTITUTIONS, ETC.
COMMERC
ANKS
C E R T I F I E D AND OFFICER
ECKS
TIME AND SAVINGS DEPOSI TS —TOTAL (1)
I N D I V I D U A L S , PARTNERS I P S , AND CORPORA!10NSSAVINGS DEPOSITS
OTHER TIME DEPOSITS
STATES AND P O L I T I C A L S U E D I V I S I O N S
DOMESTIC INTERBANK
FOREIGN—GOVTS., OFFI CIAL INSTITUTIONS, ETC.
cc
r»gRAL FUNDS PURCHASED AND SECURITIES SOLD
UNDER AGREEMENTS TO R EPURCHASE
BORROWINGS—FROM FEDERA
RESERVE BANKS
FROM OTHERS
OTHER L I A B I L I T I E S AND M
I N CONSOLIDATED S U b S I l
RESERVES FOR LOANS
RESERVES ON S E C U R I T I E S
TOTAL C A P I T A L ACCOUNTS

-•

12,865
1,C55
1,676

-2. ,523
+
509
97

+
+
+

33
288
8
50
234

220

22
107

14
344

302
132
442
477
633
71
298
970
3,904
1,881

1,342
3,207
1,644
194
419
996
81
1,378
2,165
729

234
2,179
390
1,977

361
895
180
4,148

896
786

193
2,939

11
284
2,186
1 ,569
•
11
+
656
+
88
+ 3,671
436

119
897
1,849
1,845
165
301
133
2,075
36,921

887
196
29
149
621
41
4
132
1,039
95

9,365
7,315
184
28
1,438
1
20
153
226
17,243

814
246
893
1,640
1,741

2,939
10,771
1,362
76 5
1,363

+ 1,565
•
194
698

5,937
354
32

•

+
+

~
_
"
_
-"

•

14
116

166

54
362

-— -+

5,853
25,699
1,194
3,307
7,456

•

-*-

—

7,628
1 ,653

72
2

1,712
2 79

9,382

'
_
-+

728

1,085
549
1
2,355

M E M O R A N D A
TOTAL LOANS, GROSS ADJUSTED
TOTAL LOANS AND INVESTMENTS, GROSS ADJUSTED
DEMAND DEPOSITS ADJUSTED
TIME DEPOSITS ISSUED I N DENOMINATIONS
OF $ 1 0 0 , 0 0 0 OR MORE—TOTAL
NEGOTIABLE TIME C E R T I F I C A T E S OF DEPOSIT
TO I N D I V I D U A L S , PARTNERSHIPS, AND CORPS.
TO OTHERS
A I L OTWER TIME DEPOSITS
TO I N D I V I D U A L S , PARTNERSHIPS, AND CORPS.
TO OTHERS

- 1 ,626
625
•
50
125
912
38
+
10

1,264
1,044

418
205

•

29
295
119
189

30,553

387
74A

22,976
12,747
194

14
31

100
44
21
9
36

1,107

189
2,647
833
53

--*
~
+
+
*
+
~
- —+
*

E S
44,546
25,174
318
80
11,184
384
904
3,67C
2,832
44,496

~
.

68,639
84,714
22 , 6 8 1
36,182
28,373
18,462
9,911
7,809
4,799
3,010

+
+
+

66S
749
174

1,813
114
827

2 3,002
29,315
6,050

173
371
368
3
196
58
140

N.A.
299
95
204
N.A.

12,054
8,619
6,391
2,228
3,43 5
2 , 167
1,268

Gross Liabilities of Banks to Their Foreign Branches

U .A.
N.A.

•+

*
-

116

- 1 .147

185
230

•

—~
—~
~
_

208
315

-*
-

237
105
4

27
- 1 .971
892
23

14«

•

1
11

*
_

•
•
+
•

59
7
2
13
15
3

•
•

52
345
5
86
123
175
97
273
276
66
251
87
661
663

- — --+
-w
*
.
+
~
_
*
*
-- — -"
,
---- —
•»
+
~
+
"
*
_
-*
~
_
~
*
+

23
41
9

•

3
28
1
23

•
+

168
127

15
8

•

12
4
733
366
7
124

•
291
- 1 ,041

•4-

•

508
168
52
52
206
1
3
1
27
185

5
211
23
26
24-

+
+

•

262
21
3

431
1

-*
+
4
•

~
+
+

30
156
12
245

7
197
14
296
3
152
24
59 5
96 5

508
473
8
60
48

1
7
33
181

372
69 3
467
163
451
479
91
190

•

834
94

208

295
359
483

- 1 ,805
- 1 ,189
506
•

190
172
188
16
18
24
6

N.A.
491
693
202
N.A.
N.A.
N.A.

Assets
Total Loans and Investments, (gross)
The total book value* of loans, discounts** and investments, before deductions of
reserves for bad debt losses; the sum of lines 2, 3, 15 and 16. These items are the total
principal earning assets of reporting banks.
* Book value is the value carried on the
books of reporting banks. All banks do not
use the same internal accounting methods
(i.e., treat identically discounts received
and premiums paid on securities, discount
loans and fixed assets). However, for reporting purposes, banks are requested to
make adjustments so reported book value
of securities and loans reflects face or maturity value, and reported book value of
fixed assets reflects cost less depreciation.

** Discounts are distinguished from loans
on the basis of whether interest is paid when
the credit is extended or when it is repaid.
Interest on a "loan" is paid at maturity or
in instalments during the life of the loan.
Interest on a "discount" is deducted at
the time the loan is made.

Federal Funds Sold and Securities Purchased Under Agreements to Resell—Total
Transactions that involve the sale of immediately available funds for one business
day* are ''Federal funds" transactions. Purchases of securities under agreements to
resell (RPs)** made in immediately available funds for one business day are also
considered "Federal funds" transactions. All sales of "Federal funds" are reported
here. However, banks also report two other types of transactions in this item that are
not considered "Federal funds" transactions. They are:
(1) RPs, other than those made in immediately available funds for one business day,
regardless of the maturity of the agreement to resell, and
(2) Purchases of participations in pools of securities.
Thus, the data in this item are the sum of all of the transactions cited above, that
are made with:
a. Commercial Banks
Domestic commercial banks.
b. Brokers and Dealers
Brokers and dealers in U.S. Treasury securities and dealers in other securities.
Involving U.S. Treasury Securities
RPs involving direct obligations of the U.S. Treasury and Federal funds sold to
brokers and dealers.
Involving Other Securities
RPs involving other securities, such as Federal agency securities and state and local
government obligations.
c. Others
Any firm, institution or organization other than a domestic commercial bank or securities broker or dealer, except foreign branches of reporting banks.
* Transactions made on Friday to mature
on Monday and those made the day before a holiday to mature the day after a
holiday are also included. Immediately
available funds sold under a continuing
contract are considered "Federal funds",
but "term" Federal funds transactions—
those with maturities greater than one
business day—are not. Those transactions
are included in the appropriate loan cate-

gories by business of purchaser. Borrowings and loans of immediately available
funds are referred to as "purchases" and
"sales" on bank balance sheets.
** These agreements—called repurchase
agreements or RPs—involve the sale of
securities on condition that after a specified time the original seller will buy them
back at a predetermined price or yield.

3. Other Loans—Total*
The sum of lines 4 through 14.
* Both the H.4.2 release and the release of
the Federal Reserve Bank of New York contain a footnote reporting the amount, for
the prior Wednesday, of loans sold outright
by reporting banks to:
(1) Their own holding company (if the
holding company is not a bank),
(2) Nonbank subsidiaries of their own
holding company whose assets and
liabilities are not consolidated on a
line-by-line basis with the bank's report of assets and liabilities,
(3) Nonbank affiliates whose assets and
liabilities are not consolidated on a
line-by-line basis with the bank's report of assets and liabilities (for example, companies directly or indirectly owned or controlled by the
bank that provide data processing
services or that own the bank's
property or branches),
(4) Nonconsolidated branches (branches
located outside the United States).
Loans sold outright to these institutions
are removed from reporting banks' loan

portfolios and, thus, are not entered as
"loans" in the appropriate categories in the
Weekly Condition Report. These loan sales,
however, are reported separately and appear in the footnote. Analysts often add
back these loan sales to the loan figures to
obtain a clearer picture of changes in bank
lending activity.
Loans sold under repurchase agreements
(where the bank agrees to buy back the loan
after a specified time) are reported in the
liability item "Borrowings—From Others"
(see line 29b). These loan sales are not included in the footnoted data.
When a bank sells a loan outright, the
sale is treated on the books as an asset adjustment—one type of asset (a loan) is sold
for another type of asset (an increase in the
bank's cash assets). However, when a bank
sells a loan under a repurchase agreement,
the sale is treated on the books as a form of
borrowing. Thus, the increase in cash assets
(funds received from the purchasing institution) is offset by a corresponding increase in borrowing liabilities.

4. Commercial and Industrial Loans
Loans to individuals, partnerships and corporations (other than financial institutions
and farmers) for business or professional purposes, including single payment and
instalment loans, whether secured or unsecured (except those secured by real estate).
This item also includes banks' holdings of their own and other bankers' acceptances*, and commercial paper** purchased in the open market.
Commercial and industrial loans exclude the following "business" loans that are
counted in other items:
(1) Loans to farmers (line 5),
(2) Loans to companies that purchase or carry securities (line 6 or 7),
(3) Real estate loans (line 9),
(4) Loans to nonprofit organizations such as hospitals (line 14),
(5) Loans to companies that primarily extend credit for business or personal finance
(line 8),
(6) Commercial paper purchased from nonbank financial institutions (line 8).
* Bankers' acceptances are drafts or bills
of exchange that banks have "accepted" as
their own liabilities, in effect pledging their
credit on behalf of their customers.

** Commercial paper is the designation for
unsecured, short-term negotiable promissory notes issued by nonbank business institutions and sold to investors, usually
other companies.

5. Agricultural Loans
(1) Loans—secured* (except loans secured by real estate) and unsecured—to farm or
ranch owners, operators or tenants for any purpose associated with the maintenance

or operation of a farm as a business or a home, including instalment purchases of
autos or other retail consumer goods,
(2) Farmers' notes purchased from, or discounted for, merchants.
* Includes loans secured by a commodity
whose price the Commodity Credit Corporation (CCC) is supporting. The CCC,

an agency of the Department of Agriculture, implements price support programs
for certain agricultural commodities.

6. Loans to Brokers and Dealers for Purchasing or Carrying:
a. U.S. Treasury Securities
b. Other Securities
Secured and unsecured loans to securities brokers and dealers to enable them to purchase or carry U.S. Treasury and Other Securities for their own accounts or for
customers. Also included are "matched sale-purchase agreements ,, (reverse RPs) between the Federal Reserve and a reporting bank. Other securities include stocks,
bonds and obligations of Federal agencies.

7. Other Loans for Purchasing or Carrying:
a. U.S. Treasury Securities
b. Other Securities
(1) Secured or unsecured loans, or loan renewals, that enable borrowers (other than
brokers and dealers) to purchase or carry U.S. Treasury and Other Securities,
(2) Loans subject to the provisions of Federal Reserve Regulation U.*
Reporting banks determine whether loans were made to purchase or carry stocks
or other securities. For loans where stock, or securities convertible into stock, is used
as collateral, the banks must obtain statements from borrowers noting the purpose
of the loan. Those statements determine whether the loans are included in this item.
* Regulation U limits the amount of credit
banks may extend to persons, other than
securities brokers and dealers, to purchase
certain stocks and securities that are convertible into those stocks, where the credit is

secured directly or indirectly by any stock
or security convertible into stock. This
limitation is expressed as the maximum
loan value of the collateral,

8. Loans to Nonbank Financial Institutions:
Loans to organizations whose major business is extending credit for business purposes, personal expenditures or the sale of insurance. Loans purchased from such
institutions under resale agreements and commercial paper purchased from such
institutions are also included. This item excludes loans to closed-end investment
funds (line 7), loans to brokers and dealers (line 6), and real estate loans (line 9).
Loans to nonbank financial institutions are separated into two categories: to sales
and personal finance companies and to all others.
a. Sales Finance, Personal Finance, etc.
(1) Loans to sales finance companies,
(2) Holdings of finance company commercial paper,
(3) Loans to personal finance and loan companies,
(4) Loans to factors.
b. Other
(1) Loans to real estate companies and mortgage lenders (except if secured by real
estate),
continued on next page

(2) Loans to mutual savings banks, credit unions, savings and loan associations,
other similar associations, insurance companies and Federal lending agencies,
(3) Loans to investment companies that hold the stock of operating companies for
management or development purposes,
(4) Loans to regional or local industrial authorities that extend credit to relocating or
expanding business firms,
(5) Loans to real estate investment trusts,
(6) Loans to bank holding companies.

9. Real Estate Loans
Loans secured by mortgages, deeds of trust, land contracts or other liens on real
estate (in which the lending bank may acquire title to the property if certain obligations are not met). Real estate loans are the only loans classified by type of collateral.
Excluded are mortgage loans purchased from insurance companies, mortgage companies or other lenders or investors under resale agreements. Also excluded are loans
to real estate companies, if the companies' mortgages are not sold to reporting banks
but merely pledged as collateral (the borrower rather than the lending bank holds
the lien on the property). These loans are classified as loans to nonbank financial
institutions (line 8).

10. Loans to Domestic Commercial Banks
(1) Notes and other instruments representing loans to domestic commercial banks
and "Edge Act" corporations,*
(2) Loans purchased from domestic commercial banks or "Edge Act" corporations
under resale (repurchase) agreements,
(3) Sales of "term" Federal funds (i.e., sales of immediately available funds with a
maturity greater than one business day) to domestic commercial banks and "Edge
Act" corporations.
This item excludes one-day Federal funds sold by reporting banks to other banks,
securities purchased from other banks under resale (repurchase) agreements, and
purchases of participations in pools of securities, all of which are counted in line 2a.
* "Edge Act" corporations are chartered
by the Board of Governors to engage in
financing international commerce. The
Board was given this chartering authority

in 1919 through an amendment to the
Federal Reserve Act—Section 25(a)—called
the "Edge Act" after its sponsor, Senator
Walter E. Edge of New Jersey.

11. Loans to Foreign Commercial Banks
Loans to foreign commercial banks (including foreign branches of other U.S. banks)
and other foreign financial institutions, such as savings banks, discount houses or
similar institutions, that accept short-term deposits—typically of one year or less.

12. Consumer Instalment Loans*
(1) Instalment loans to individuals, except farmers (see line 5), regardless of the size
of the loan or its maturity, for personal expenditures other than purchasing real estate
or securities,
(2) Credit extended to individuals under "bank credit," "check credit," "revolving
credit," or similar plans where repayments may be made in instalments,
(3) Retail instalment paper purchased by banks from such firms as automobile
dealers and department stores.

* To the extent that banks receive instalment payments on consumer loans and do
not immediately reduce the amount of the
loans on their internal books, they accumulate such payments as "deposits" to

repay the loans at maturity. For purposes
of this report, however, "deposits" accumulated for repayments of personal loans
are netted against this item,

13. Loans to Foreign Governments, Official Institutions, etc.
Loans to foreign governments, central banks, development banks, treasuries, exchange control offices, stabilization funds, nationalized banks, banks owned by
foreign governments, and international institutions, such as the International Bank
for Reconstruction and Development (World Bank), and the Inter-American Development Bank.

14. Other Loans
Loans and discounts not classified in previous categories. Principal types are:
(1) Ordinary overdrafts* of demand deposit accounts,
(2) Demand loans and single-payment time loans to individuals (except farmers) for
personal expenditures,
(3) Loans to nonprofit institutions, such as churches, hospitals, schools, charities
and clubs.
* An ordinary overdraft is the amount by
which a checkbook balance has been overdrawn by a depositor through error. In effeet, overdrafts are unsecured loans.
"Planned" or "advance agreement" overdrafts, like any other loans, are reported

according to their "purpose," e.g., consumer overdrafts under line of credit agreements (line 12) and business overdrafts
under commercial and industrial loans
(line 4).

15. U.S. Treasury Securities—Total
a. Treasury Bills
b. Treasury Certificates of Indebtedness
c. Treasury Notes and U.S. Bonds Maturing
Within 1 Year
1 Year to 5 Years
After 5 Years
This item consists of:
(1) Direct U.S. Treasury obligations held outright. Treasury obligations held under
repurchase agreements are excluded here but are counted in line 2.
(2) Obligations of the Federal Financing Bank,* reported in appropriate Treasury
securities categories depending upon form and maturity of issue.
* The Federal Financing Bank, which is
under the control of the Treasury Department, purchases securities of Federal
agencies, financing these transactions by
issuing its own securities to the public. The

Bank was established in December 1973 to
improve Government debt management
practices and maintain an orderly money
market through the centralized sale of
Federal securities.

16. Other Securities—Total
Stocks, bonds and securities (other than U.S. Treasury obligations) owned by reporting banks; the sum of lines 17 and 18.

17. Obligations of States and Political Subdivisions:
a. Tax Warrants and Short-Term Notes and Bills
Tax warrants and tax anticipation notes,* and other obligations with an original maturity of one year or less issued by states, political subdivisions (such as: counties,
municipalities, local housing authorities, and school, irrigation, drainage, and reclamation districts), instrumentalities of one or more states, and territories or insular
possessions of the United States.
b. All Other
Obligations having an original maturity greater than one year, issued by states, political subdivisions, instrumentalities of one or more states, and territories or insular
possessions of the United States.
* Tax warrants and tax anticipation notes
are short-term obligations of a municipality or other political subdivision issued in

anticipation of the collection of specific
taxes pledged to their retirement,

18. Other Bonds, Corporate Stocks, and Securities:
a. Participation Certificates in Federal Agency Loans
Participation certificates issued by such agencies as the Federal National Mortgage
Association, Federal Housing Administration, Government National Mortgage Association and the Export-Import Bank of the United States that represent participations in pools of loans held by these agencies.
b. All Other (including corporate stocks)
(1) Obligations issued by U.S. Government-owned corporations and agencies (other
than participation certificates) such as those issued by the:
Federal Land Banks
Federal Intermediate Credit Banks
Banks for Cooperatives
Federal National Mortgage Association
Federal Home Loan Banks
Tennessee Valley Authority
Federal Housing Administration
Government National Mortgage Association
(2) Corporate stocks* and bonds,
(3) Stock of Federal Reserve Banks,
(4) Equipment trust securities,**
(5) Foreign securities.
* The Banking Act of 1933 provides that,
except as otherwise permitted by law,
member banks may not purchase corporate
stock for their own account. A bank may
legally come to own stock as a result of a
defaulted loan secured by stock but may not
retain it indefinitely. The Banking Act of
1933 does not affect corporate stock that a
bank may have acquired prior to the
passage of the Act.

** Securities issued as part of a financing
arrangement often used in the acquisition
of railroad equipment. Railroads generally
raise capital by mortgaging their equipment and selling securities based on the
mortgage. The mortgage is held by a
trustee, and it, rather than the equipment,
becomes the security for the certificates.

19. Cash Items in Process of Collection
Checks, including U.S. Government checks, postal money orders, Federal food
coupons and such other items payable on demand that have been classified by the
Federal Reserve as cash items and have been received and are being collected.

Cash items in the process of collection include those:
(1) Being processed for reporting banks by Federal Reserve Banks,
(2) That will be presented for payment or forwarded for collection the following
business day,
(3) Drawn on a reporting bank itself that, although paid or credited to customers'
accounts by the reporting bank, have not yet been charged to deposit liabilities on
the reporting date. These items are referred to as "unposted debits."

20. Reserves with Federal Reserve Banks
Balances at Federal Reserve Banks. The Federal Reserve Act—Section 19—requires
member banks to maintain balances equal to specified percentages of their demand
and time deposits, and certain other liabilities at the district Reserve Bank.

21. Currency and Coin
U.S. currency and coin owned and held by reporting banks, including currency and
coin in transit to or from Federal Reserve Banks. This "vault cash" may be counted
as part of member banks' legal reserves.

22. Balances with Domestic Banks
Demand and time balances (including certificates of deposit) at other commercial
banks, private banks, "Edge Act" corporations, mutual savings banks, credit unions
and branches and agencies of foreign banks in the United States, its territories and
insular possessions.
Since banks maintain demand deposit balances with each other, a reporting bank
may have a "due from" (this line) and "due to" (line 26d) account with another bank
or banks. These "reciprocal demand balances" are netted and reported either as
"due from" or "due to" except when the other bank is an American branch or agency
of a foreign bank. Then the "due from" balances are reported gross.

23. Investments in Subsidiaries Not Consolidated*
Reporting banks' total investment in majority-owned domestic and foreign subsidiaries, including commercial banks, not consolidated on a line-by-line basis with
the banks' report of assets and liabilities.
* Reporting banks must consolidate into
their condition statements, on a line-byline basis, the assets and liabilities of any
"significant" domestic subsidiary in which
they own or control 50 percent or more of
the outstanding stock, except "Edge Act"
corporations or a domestic commercial
bank subsidiary that files a Call Report
with the Comptroller of the Currency,
Federal Deposit Insurance Corporation,
or Federal Reserve. A subsidiary is "significant" if (a) the reporting bank's investment equals 5 percent or more of the
bank's own capital accounts, (b) the gross
operating earnings of the subsidiary amount
to 5 percent or more of the reporting bank's
own gross operating revenue, or (c) the
subsidiary's income (loss) before income

taxes and securities gains or losses amounts
to 5 percent or more of that of the
reporting bank.
Investments in majority-owned subsidiaries that are not "significant" do not have
to be consolidated. However, reporting
banks may, if they choose, consolidate these
investments as long as they maintain a
consistent reporting policy.
Therefore, this item includes only investments in (a) majority-owned subsidiaries not "significant" and not being consolidated at the option of the banks and
(b) investments in majority-owned "Edge
Act" corporations, foreign subsidiaries and
domestic commercial bank subsidiaries
not filing Call Reports.

24. Other Assets
(1) Demand and time balances (including certificates of deposit) with banks in
foreign countries, including foreign branches of other American banks,
(2) Net amounts "due from" foreign branches of reporting banks, (If outstanding
balances with all foreign branches result in a net "due to," the amount is reported
with "other liabilities" in line 40.)
(3) Bank premises and other real estate, furniture and fixtures, and assets indirectly
representing bank premises,*
(4) Customers' liabilities on acceptances not held by the reporting banks, (If held by
the banks, the acceptances are included with "commercial loans" in line 4.)
(5) Income earned but not collected,
(6) Insurance and other prepaid expenses,
(7) Cash items not in the process of collection,
(8) Securities borrowed,
(9) Foreign currency and coin,
(10) Equipment owned under direct-lease financing arrangements.
* Many banks incorporate their premises
and hold this asset as stock in a subsidiary
corporation. That stock is counted here.

25. Total Assets/Liabilities
The sum of line 1 plus lines 19 through 24. Also the sum of lines 26 through 33.

Liabilities
26. Demand Deposits—Total
Balances payable on demand. The sum of lines 26a through 26f.
a. Individuals, Partnerships and Corporations
Demand deposits of private, domestic and foreign individuals, partnerships and corporations, including:
(1) The banks' own trust departments, when they are acting as trustee for a trust,
(2) Other banks' trust departments,
(3) Building, savings and loan, and similar associations,
(4) Federal agencies.
This item excludes demand deposits of:
(a) "Edge Act" corporations, which are deposits of domestic banks (line 26d),
(b) The banks' own trust departments, when they are acting as their own
trustees.
b. States and Political Subdivisions
Demand deposits of states, political subdivisions, (such as: counties, municipalities,
local housing authorities, school, irrigation, drainage, and reclamation districts),
instrumentalities of one or more states, territories or insular possessions of the U.S.
c. U.S. Government*
Demand deposits of the U.S. Government, Treasury, and Postal Service.

d. Domestic Interbank:

Commercial
Mutual Savings
D e m a n d deposits of domestic commercial and private b a n k s , mutual savings b a n k s ,
the American branches and agencies of foreign b a n k s , and "Edge Act" corporations
in the United States, its territories or insular possessions.
Reciprocal demand balances of these b a n k s are netted and reported either as
"due from" or " d u e t o , " except that reciprocal demand balances with the American
branches and agencies of foreign banks are reported gross.
e. Foreign:
Governments, Official Institutions, etc.
D e m a n d deposits of:
(1) Central b a n k s , foreign development b a n k s , treasuries, exchange control offices
and stabilization funds,
(2) International institutions such as the International Bank for Reconstruction and
Development (World Bank), and the Inter-American Development Bank,
(3) Foreign governments, their agencies, instrumentalities or representatives in the
United States,
(4) Nationalized b a n k s and banks owned by foreign governments.
Commercial Banks
D e m a n d deposits of:
(1) Commercial banks in foreign countries,
(2) Foreign branches of other U . S . banks, (Amounts " d u e t o " reporting b a n k s ' own
foreign branches are counted in line 30.)
(3) Foreign savings b a n k s , discount houses and similar institutions that accept shortterm deposits—typically of one year or less. Reciprocal demand balances of these
banks and institutions are included and reported gross.
f. Certified and Officers' Checks
(1) Unpaid certified checks of depositors,
(2) Cashiers', officers' and registered checks,
(3) Bank money orders,
(4) Outstanding travelers' checks,
(5) Travelers' letters of credit, drafts and bills of exchange issued for money or its
equivalent.
*The U.S. Government maintains part of
its operating cash balance in "Tax and
Loan" accounts at about 13,000 commercial banks. A portion of tax receipts
and, on occasion, funds from the sale of
new Treasury obligations are deposited in
these accounts to moderate the impact of

Treasury borrowing and tax collections on
bank reserves. As funds are needed for disbursements, the Treasury issues "calls"
directing commercial banks to transfer
funds to the Treasury's account at the
Reserve Banks,

27. Time and Savings Deposits*—Total
The total of lines 27a through 27d, plus time deposits of the U . S . Government and
foreign commercial banks, two accounts which are not itemized.
a. Individuals, Partnerships and Corporations:
Savings Deposits
Funds deposited by one or more individuals, nonprofit organizations, the U . S .
Government or any state or political subdivision.** The depositor may be required
to give 30 days written notice of intent to withdraw the funds, but this provision is
seldom invoked.
continued on next page

Other Time Deposits
(1) Certificates of deposit issued to, and time deposits, open account, held by, individuals, partnerships and corporations,
(2) Christmas club, vacation club and similar accounts,
(3) Open accounts of, and certificates of deposit issued to, the banks' trust departments,
(4) Certificates of deposit issued to, and open accounts of, trust departments of other
banks.
Deposits accumulated for repayment of personal loans are not included. They are
netted against consumer instalment loans (line 12).
b. States and Political Subdivisions
Time deposits of states, political subdivisions, (such as: counties, municipalities,
local housing authorities, school, irrigation, drainage, and reclamation districts),
instrumentalities of one or more states, territories or insular possessions of the United
States.
c. Domestic Interbank
Time deposits of domestic commercial and private banks, mutual savings banks, the
American branches and agencies of foreign banks, and "Edge Act" corporations in
the U.S., its territories or insular possessions. Since banks maintain time deposit balances with each other, a reporting bank may have a "due from" (line 22) and "due
to" (this line) account with another bank or banks. In contrast to the treatment of
demand balances, reciprocal time deposit balances of banks are reported gross.
d. Foreign—Governments, Official Institutions, etc.
Time deposits of:
(1) Foreign central banks, development banks, treasuries, exchange control offices
and stabilization funds,
(2) International institutions, such as the International Bank for Reconstruction and
Development (World Bank), and the Inter-American Development Bank,
(3) Foreign governments, their agencies, instrumentalities or U.S. representatives,
(4) Nationalized banks and banks owned by foreign governments that perform, as an
important part of their function, central bank-type activities.
* Time and savings deposits include "time
certificates of deposit (unmatured)," "time
deposits, open account" and "savings
deposits."
"Time certificates of deposit (unmatured)" are negotiable or nonnegotiable
instruments evidencing a deposit. The
certificates may not be made payable in
less than 30 days after the date of deposit.
"Time deposits, open account" are deposits made in accordance with a written
contract specifying that maturity shall not
be less than 30 days after the date of
deposit.
For a definition of a "savings deposit",
see line 27a.

** Funds in which individuals, nonprofit
organizations, the U.S. Government or any
state or political subdivision hold the entire
beneficial interest may also be deposited in
savings accounts. For example, a corporation may deposit employees' pension funds
in a savings account if the entire beneficial
interest is owned by the employees, not the
corporation. A corporation that owns an
apartment house operated for profit may
deposit tenants' rent security in a savings
account if the entire beneficial interest is
held by tenants who could themselves maintain a savings account, not the corporation.

28. Federal Funds Purchased and Securities Sold Under Agreements to Repurchase
Purchases (borrowings) of immediately available funds for one business day, securities sold under agreements to repurchase identical or similar securities, regardless of
maturity, and sales of participations in pools of securities.

Included are transactions with commercial b a n k s , securities dealers, the
American branches and agencies of foreign banks or any other firm, institution or
organization but not transactions with foreign branches of the reporting b a n k s .

29. Borrowings:
a. From Federal Reserve Banks
b. From Others
The total borrowed by reporting banks on their promissory notes, customers' notes
and any other collateral. Included are loans and participations in certain types of
pools of loans sold under agreements to repurchase, regardless of maturity,* and
purchases of immediately available funds maturing in more than one business day.
* Not all participations in pools of loans
are counted in this item. "Pass through"
participations, where the terms of the participation, both initial sale and maturity,

are the same as the terms of the loans in the
pool, are written-off on the asset side,
rather than being shown as borrowings,

Note: Line 30 appears in the following form on the H.4.2 and H.4.3 releases but is
reported as two items, "other liabilities'1 and "minority interest in consolidated
subsidiaries, " on the New York Reserve Bank's release.
30. Other Liabilities and Minority Interest in Consolidated Subsidiaries
(1) Net amounts "due t o " foreign branches of reporting b a n k s ,
(2) Mortgages and other liens on bank premises and other b a n k real estate,
(3) Reporting b a n k s ' outstanding acceptances,
(4) Securities borrowed,
(5) Dividends declared but not yet paid,
(6) Income collected but not yet earned,
(7) Expenses accrued but not yet paid,
(8) Ownership of others in majority-owned subsidiaries consolidated by reporting
banks,
(9) Amounts due Federal Reserve Banks or other banks for check-clearing accounts.*
* Virtually all these balances disappeared
with the November 1972 change in Federal
Reserve Regulation J, which required sameday payment on cash letters sent by the
Federal Reserve, and the November 1973

amendment to Federal Reserve Regulation D, which classified ''other liability"
accounts used for check clearing purposes
as "deposits" against which reserves must
be maintained.

31. Reserves for Loans*
Reserves for expected but undetermined losses on loans.
* These reserves—often called "valuation
allowances," "unallocated charge-offs,"
"valuation reserves" or "reserves for bad

debt losses"—are not deducted from loan
accounts under assets but are listed here,

32. Reserves on Securities*
Reserves for expected but undetermined losses on securities, including trading account securities—those banks hold for regular dealings with other banks or the public
in a trading account.

footnotes on next page

* These reserves are not deducted from

security accounts but are listed here.

33. Total Capital Accounts
Total capital (the par value of reporting banks' common and preferred stock, and
the total face value of capital notes and debentures), surplus, undivided profits, and
depreciation and capital reserves of reporting banks.

Memoranda
34. Total Loans, Gross Adjusted
The sum of:
(1) Federal funds sold and securities purchased under agreements to resell—total
(line 2),
(2) Other loans—total (line 3);
minus:
(1) Federal funds sold to and securities purchased under agreements to resell to
domestic commercial banks (line 2a),
(2) Loans to domestic commercial banks (line 10).

35. Total Loans and Investments, Gross Adjusted
Total loans and investments, gross (line 1);
minus:
(1) Federal funds sold to and securities purchased under agreements to resell to
domestic commercial banks (line 2a),
(2) Loans to domestic commercial banks (line 10).

36. Demand Deposits Adjusted*
Demand deposits—total (line 26);
minus:
(1) Cash items in the process of collection (line 19),
(2) Demand deposits of:
(a) U.S. Government (line 26c),
(b) Domestic interbank—commercial (line 26d).
* Total demand deposits are adjusted to
approximate the demand deposit component of the money supply.

37. Time Deposits Issued in Denominations of $100,000 or More—Total
The sum of lines 37a and 37b.
a. Negotiable Time Certificates of Deposit
That part of total time deposits consisting of negotiable time certificates of deposit
issued in denominations of $100,000 or more. These CDs are also counted in the
appropriate time deposit category by owner in lines 27a through 27d.

To Individuals, Partnerships and Corporations
CDs issued to foreign and domestic individuals, partnerships and corporations, including n o n b a n k financial and nonfinancial businesses.
To Others
CDs issued to:
(1) The U . S . Government and its agencies,
(2) States and political subdivisions,
(3) Foreign governments, official institutions, central banks and international organizations,
(4) U . S . commercial and mutual savings b a n k s , and banks in foreign countries.
b. All Other Time Deposits
T h a t part of total time deposits consisting of nonnegotiable time certificates of deposit and open accounts issued in denominations of $100,000 or more. These
instruments are also counted in line 27.
To Individuals, Partnerships and Corporations
Nonnegotiable certificates and open accounts issued to foreign and domestic individuals, partnerships and corporations, including nonbank financial and nonfinancial businesses.
To Others
Nonnegotiable certificates and open accounts issued to:
(1) The U . S . Government and its agencies,
(2) States and political subdivisions,
(3) Foreign governments, official institutions, central banks and international organizations,
(4) U . S . commercial and mutual savings b a n k s , and banks in foreign countries.
Note: The following item does not appear on the H.4.3 release. It is reported on the
H.4.2 release and the condition report issued by the Federal Reserve Bank of
New York.
38. Gross Liabilities of Banks to Their Foreign Branches
This item is often used as a proxy for "Eurodollar borrowings"—the borrowings of
domestic b a n k s from their branches outside the United States—even though several
other types of transactions between domestic banks and their foreign branches are
also reported here. "Eurodollar borrowings" are entered on the books of reporting
banks as liabilities "due t o " their own overseas branches (gross), not as deposits. The
Federal Reserve Bank of New York's release on weekly reporting b a n k s in New York
City reports an average of daily "borrowings" from Wednesday through Tuesday.

Basic Reserve Position, and Federal
Funds and Related Transactions of
Eight Major Reserve City Banks
in New York City

The Basic Reserve Position, and Federal Funds and Related Transactions of Eight
Major Reserve City Banks in New York City is released at the Federal Reserve Bank
of New York each Thursday afternoon. No mailing list is maintained; the release is
available at the Bank.
The Board of Governors of the Federal Reserve System reports similar data in the
H.5 release for 46 major reserve city banks, with breakdowns for the 8 in New York
and 38 banks outside New York (5 in Chicago and 33 others outside New York City
and Chicago). H.5 is issued each Friday and "covers the week ended the Wednesday
nine-days earlier. These figures are published with a one-month lag in the Federal
Reserve Bulletin on the page headed "Basic Reserve Position, and Federal Funds
and Related Transactions/'
The basic reserve position data for the New York City banks released by the Federal Reserve Bank of New York are preliminary. They do not include "as of" adjustments (which can occasionally be very large) that may be reported after the statement week. Such adjustments represent corrections of errors made in posting, or the
failure to post, credits or debits to member bank reserve accounts. The Board of
Governors' H.5 release includes "as of" adjustments.
The Board's choice of 46 banks for the H.5 series was based on the findings of a
three-year study completed in 1962 of Federal funds data submitted by about 240
banks. The study showed that a small, stable group of banks accounted for most of
the dollar volume of Federal funds traded. A discussion of that study, including an
explanation of the technical criteria used in selecting the reporting banks, can be
found in an article, "New Series on Federal Funds," in the August 1964 Federal
Reserve Bulletin. The article includes back data to September 1959, when the figures
were first collected.

Contents
Line

Page

42
FEDERAL RESERVE BANK OF NEW YORK
For release at 4:00 p.m.
uly 24, 1975

42
BASIC RESERVE POSITION, AND FEDERAL FUNDS AND RELATED TRANSACTIONS
OF EIGHT MAJOR RESERVE CITY BANKS IN NEW YORK CITY
(Daily average figures; in millions of dollars)

42
Week ended
July 23

asic reserve position

Excess reserves or deficit

Change
from
previous
week

(-)

157

Plus:

Net carryover—excess, deficit

(-)

Less:

Borrowings at Federal Reserve Bank

151
4,671

+
73
-1,800

-4,761

+1,820

5,347
676
674
4,673
2

-1,861
61
63
-1,798
+
2

1,200
339
861

43
Net interbank Federal funds transactions

Equals:

Basic reserve surplus or deficit

(-)

nterbank Federal funds transactions

Gross purchases
Gross sales
Two-way transactions
Net purchases of buying banks
Net sales of selling banks
2
lated transactions with U. S. Government securities dealers
3
Loans to dealers
Borrowings from dealers

186
47
233

Net loans
ederal funds rate (in percent)

Effective
Date
July 17
18
21
22
23

45'

6
- 6
5 7/8-6
6
- 6
6 1/16- 6
6 3/8-6

1/8%
1/4
3/8
3/8
7/8

Data are preliminary; they do not include all "as of adjustments".
Includes Federal funds transactions with dealers and funds acquired or supplie
by clearing banks.
Includes loans made in Clearing House funds.
•larket Statistics Division

6.07%
6.07
6.08
6.10
6.50

Trading Range

Basic Reserve Position
The basic reserve position can be calculated in any of the following three ways:
(1) Total reserves minus required reserves, borrowings from Reserve Banks and net
Federal funds* purchases,
(2) Nonborrowed reserves** minus required reserves and net Federal funds
purchases,
(3) Excess reserves minus borrowings from Reserve Banks and net Federal funds
purchases.
Only borrowings at Reserve Banks and Federal funds transactions among domestic commercial banks are counted in computing the basic reserve position, because
these two types of transactions are clearly and immediately related to the reserve management of the large commercial banks. Money market banks also use other means
to adjust reserve positions, such as posting a rate on demand loans to Government
securities dealers to discourage further borrowing, telling dealers to finance elsewhere,
selling short-term assets, and borrowing in the Eurodollar market. While adjustment
in the Federal funds market is typical, the banks may use the other sources more or
less frequently, depending primarily on cost. Those transactions are not counted in
determining the basic reserve position. Also, the distinction between reserve
adjustment and the management of liabilities and assets is not always clear-cut.
A member bank must hold for the seven days in each statement week ended Wednesday, reserves—vault cash and balances at its Federal Reserve Bank—equal at
minimum to the sum of certain specified percentages of its net demand deposits, time
deposits and other specified liabilities. The amount of required reserves that must be
held in the current week (Thursday through Wednesday) is determined by applying
the various reserve requirement percentages to the daily average of "reservable" balances for the seven days (Thursday through Wednesday) two weeks before.
In computing the amount of required reserves, banks can subtract from the total
of demand deposits, cash items in the process of collection, and balances due from
domestic banks that are subject to immediate withdrawal.
Banks have a profit incentive for keeping close tabs on reserve positions. There is
an "opportunity cost" in holding excess reserves because reserve balances earn no
income. Reserve deficiencies are subject to a penalty. The gap between reserves on
hand and reserve requirements indicates the volume of excess reserves or the reserve
deficiency that must be covered by borrowing in the Federal funds market, at the
Reserve Bank and/or by other liability or asset adjustments.
The Reserve Bank sends member banks daily statements showing actual reserve
balances at the close of business that day. Most banks receive the statement the
following morning. By comparing the amount of reserves actually held, including
vault cash, a bank can determine with reasonable accuracy whether it is running a
deficit or has excess reserves.
Money market banks go a step further by preparing early morning estimates of
their reserve positions for that day. Based on these estimates they make daily reserve
position adjustments designed to minimize the cost of reserves during the week, and
to avoid costly excesses or deficiencies.
Typically, money market banks buy large amounts of Federal funds each week.
Bank management determines the proportion of Federal funds to be purchased,
relative to sales of certificates of deposit or sales of assets, to expand reserves. On a
day-to-day basis, many other banks use Federal funds transactions to balance out
unforeseen changes in reserve positions due to changes in assets or liabilities, or to
cover loan commitments.
The "basic reserve position" was developed to gauge pressure on a single money
market bank or the entire group, by measuring the amount of residual borrowing in
the Federal funds market or from the Federal Reserve needed to cover requirements.
Also, the basic reserve position of the New York City banks (or the level of their
net purchases of Federal funds) viewed against the pattern of short-term interest
rates can indicate pressure in the Federal funds market.
The Federal funds market is where residual supply and demand for reserves intercontinued on next page

act. If banks are deficient, the Federal funds rate will rise and member bank borrowings at the discount window will likely rise also. If the basic reserve deficit of the
major money market banks increases, this indicates a shift of reserves from these
banks to others and, even though the level of nonborrowed reserves in the banking
system remains the same, there is greater upward pressure on the Federal funds rate.
Knowledge of the basic reserve position of the major money market banks assists
the trading desk at the Federal Reserve Bank of New York in evaluating whether
operational policy targets, such as nonborrowed reserves, are performing as projected.
* The net Federal funds transactions referred to are borrowings and lendings
(purchases and sales) of immediately available funds for one business day (including
transactions made under continuing contracts). "Term" Federal funds transactions are interbank loans and are exeluded from this report. Federal funds

transactions (unlike borrowings from the
Federal Reserve) do not affect the level of
total reserves, excess or free reserves of the
banking system but only redistribute reserves within the banking system,
** Nonborrowed reserves equal total ras e r v e s minus borrowings from Reserve
Banks.

Excess Reserves or Deficit (—)
The difference between total reserves (eligible to meet reserve requirements) and
required reserves (reserves that must be held).
Balances maintained by member banks at Federal Reserve Banks and coin and
currency held by member banks are the only assets designated as legal reserves for
member banks. A bank with more of these reserves than required has ''excess reserves." If it has less, it has a ''reserve deficit" (designated by a minus number).

2. Plus: Net Carryover—Excess, Deficit (—)
The amount of required reserves that must be held in any week (Thursday through
Wednesday) is determined by applying reserve requirements to an average of daily
deposit balances for the like seven-day period two weeks before. Any excess or
deficiency of 2 percent or less of the required amount may be carried over and "used"
in the following week. However, a surplus cannot be carried over for more than one
week. If not "used," the surplus is lost.
An excess in one week may be used to offset a deficiency in the next. No penalty
is imposed on a bank with a deficiency of 2 percent or less, if the deficiency is offset
by excess reserves in the next period. Thus, a bank with an excess has an incentive
to seek a deficiency in the following week, and vice versa. As a result, week to week,
this figure for major money market banks often shows a saw-tooth pattern of excesses
and deficits.

3. Less:
a. Borrowings at Federal Reserve Bank
Credit Federal Reserve Banks grant to member banks, usually on the member banks'
own promissory notes secured by U.S. Government securities, customer loans or
other acceptable collateral.
b. Net Interbank Federal Funds Transactions
(1) Gross purchases of all banks in the series (line 5) minus gross sales of all banks
in the series (line 6),
or
(2) Net purchases of net buying banks (line 8) minus net sales of net selling banks
(line 9).

4. Equals: Basic Reserve Surplus or Deficit (—)

The sum of lines 1 and 2 minus the sum of lines 3a and 3b.

Interbank Federal Funds Transactions
5. Gross Purchases
6. Gross Sales
In a given week, a bank may both buy and sell Federal funds, and these gross purchases and gross sales with domestic commercial banks are reported in these two
lines. Such two-way transactions arise for a number of reasons. Banks may miscalculate their reserve needs for the week, so that on one day they may be buying (selling) funds and then on a subsequent day they may be selling (buying) funds. Some
banks also arbitrage Federal funds on a same-day basis and/or intraweekly. In
such transactions the banks may buy Federal funds in the hope that the funds can
be sold at a higher rate, or sell Federal funds they hope to replace at a lower rate.

7. Two-Way Transactions
Reporting banks' purchases and sales of Federal funds with other banks that offset
each other within the same statement week.
Gross purchases and sales figures do not reveal shifts in reserve needs or the
availability of reserves to reporting banks, because a sizable amount of Federal
funds transactions are made for the accommodation of other banks and other eligible customers. The two-way transactions data isolate and adjust for the large volume of transactions in which the reporting banks serve merely as intermediaries.

8. Net Purchases of Buying Banks
Gross purchases (line 5) minus two-way transactions (line 7).

9. Net Sales of Selling Banks*
Gross sales (line 6) minus two-way transactions (line 7).
* Net purchases and net sales of Federal
funds are more significant than gross purchases and gross sales, because they reveal

either shifts in reserve needs or in the
availability of reporting banks' reserves,

Related Transactions With U.S. Government
Securities Dealers
Includes collateral loans and Federal funds sales made by reporting banks to primary
dealers in U.S. Government securities and any borrowings from such dealers.
There are about two-dozen primary U.S. Government securities dealers that trade
in the "open market" through which monetary policy is transmitted. The Federal
Reserve, by buying or selling U.S. Government and Federal agency securities in this
open market, increases or decreases the level of nonborrowed bank reserves and
affects the cost of short-term credit within the banking system (Federal funds rate)
consistent with longer-run policy objectives.
More than half the dealers are nonbank institutions that finance most of their
portfolios with borrowed funds. About half these funds come from nonfinancial corcontinued on next page

porations to whom the dealers sell securities under repurchase agreements; most of
the remainder comes from banks. Banks outside New York City supply about onefifth at rates close to the Federal funds rate. The New York City banks also supply
about one-fifth of the borrowed funds, the residual needs of the dealers, at rates
somewhat higher than the Federal funds rate.
Bank dealer departments are typically financed by their banks—usually through
purchases of Federal funds—and by selling securities to investors under repurchase
agreements. The dealer departments are charged an internal cost-of-money rate that
varies by institution.
The related transactions with U.S. Government securities dealers are not counted
in the basic reserve position measure and are reported separately. This is done because a large and indeterminable portion of the credit reporting banks extend to
dealers represents loans to accommodate the dealers and not to adjust the banks'
reserve positions, and because these transactions are volatile and often related to
U.S. Treasury financings. However, changes in dealer financing may frequently
explain shifts in the basic reserve deficit that affect demand for Federal funds.
Related transactions with U.S. Government securities dealers data are also significant in providing additional evidence of reserve availability among the large New
York City banks and in the banking system.

10. Loans to Dealers
Includes reporting banks':
(1) Collateral loans made to U.S. Government securities dealers,*
(2) Federal funds sold to dealers,
(3) Net funds supplied to dealers by reporting banks serving as clearing banks.**
"Loans to dealers" data include only loans to firms that make primary markets in
U.S. Government securities. The loans must involve a specified type of collateral,
such as Government securities, Federal agency issues, bankers' acceptances, certificates of deposit, or commercial paper. Loans to dealers against other types of collateral are excluded because interest rates on these loans tend to be somewhat higher
and less sensitive to daily market conditions.
* Collateral loans are generally made in
"Federal funds." However, a small portion are made in "clearinghouse funds,"
which become available the next business
day. Since dealers typically must borrow to
finance a purchase of securities, and, in
most instances, the seller will not give up
the securities until "good" funds are received, the dealer generally must purchase
Federal funds when he obtains a collateral
loan in clearinghouse funds. The Federal
funds borrowing is repaid the following
day, when the proceeds from the collateral
loan become available.

** Certain banks serve as clearing agents
for the nonbank dealers, arranging for
deliveries, payments and safekeeping of
securities. As part of this service, the clearing banks may provide the Federal funds
the dealers need. These transactions are
not recorded on the clearing banks' books
as Federal funds sold, or as loans of any
kind. However, since the clearing banks
pay immediately available funds for the
dealers, such transactions represent a drain
on their reserve balances and, therefore,
are included in the totals for funds provided to dealers.

11. Borrowings from Dealers
(1) Federal funds borrowed from nonbank dealers,*
(2) Net funds "acquired" from nonbank dealers by clearing banks,**
(3) Securities sold to dealers under agreements to repurchase the securities within a
specified period (called "matched sale-purchase transactions," "reverse repurchase
agreements," or "reverse repos"),
(4) Any other secured borrowings from nonbank dealers.

* Dealers repay loans originally made in
clearinghouse funds with the same type
of funds. Since they receive immediately
available funds when they sell securities
financed by such loans, but are not required to make payment until the next day,
they can sell Federal funds to banks whenever they repay "clearinghouse" loans.
** Dealers may elect to leave the Federal
funds that become available when they repay a "clearinghouse" loan with their
clearing banks. The acquisition of the
funds by the clearing bank is not recorded

as a borrowing or lending transaction, or
a Federal funds purchase. Instead, it is
reported as net funds acquired. Unlike a
regular Federal funds transaction, where
the interest cost is paid immediately, the
clearing bank accumulates the charges for
funds supplied, and the credits for funds
acquired, and settles the net difference
with each dealer. The charges and credits
for funds supplied or acquired are based
on the Federal funds rate prevailing at the
time of each transaction.

12. Net Loans
Line 10 minus line 11.
Note: The following data appear only on the "Basic Reserve Position" release of the
Federal Reserve Bank of New York.
13. Federal Funds Rate (in percent)
Effective Rate
A weighted average of the rates (expressed in annual terms) at which different
amounts of Federal funds were traded through brokers during the day.
The effective rate is determined daily by the Federal Reserve Bank of New York on
the basis of direct contacts with Federal funds brokers in New York City. The rate is
representative, however, of the cost of Federal funds throughout the country.
Trading Range
The lowest and highes rates brokers report to the New York Reserve Bank each day.

Weekly Summary of Banking
and Credit Measures

The H.9 statistical release, made available each Thursday by the Board of Governors
in Washington, reports averages of daily figures for principal reserve and monetary
aggregates, and interest rates on major money market instruments.
The reserve aggregates include member bank total, nonborrowed and required
reserves, and reserves available to support private nonbank deposits (RPD). The
monetary aggregates include the money supply (Mi and M 2 ), the adjusted member
bank credit proxy, and other deposit totals. The level of member bank borrowings is
also shown.
Changes in the reserve and monetary measures and interest rates over a number of
months may indicate the direction in which monetary policy is moving or the pressure of operating factors against bank reserves. The Federal Open Market Committee often uses these measures and rates as operational or intermediate policy targets,
as well as yardsticks of past performance.
Data on the aggregates are obtained from the weekly reports member banks file
with district Federal Reserve Banks under reserve requirement regulations. These
reports show daily deposit totals by type of deposit. The Board converts the data to
weekly and monthly averages.
Reserve and monetary aggregates are reported in billions of dollars ($ bil.) and are
seasonally adjusted (designated SA). Other reserve measures and interest rate data
are not seasonally adjusted (designated NSA).
The release has seven columns of data for the reserve and monetary aggregates and
four for the other reserve measures and interest rates. Column 1 shows reserve aggregate and interest rate statistics for the statement week ended the previous day (Wednesday). Data in column 1 for the monetary aggregates, however, are for the statement week ended one week earlier. Column 2 reports statistics for the week before
those reported in column 1. Column 3 shows average data for the latest four weeks;
column 4 average data for the four-week period ended four weeks earlier.
Columns 5, 6 and 7 report seasonally adjusted annual rates of change, not compounded, between the latest four-week period and averages for the four-week periods
ended 13 weeks, 26 weeks and 52 weeks earlier. For the reserve aggregates, the weeks
included in the latest average are the four weeks ended the previous day. For the
monetary aggregates, the weeks included are the four ended one week earlier.

Contents
Line

Page

FEDERAL

WEEKLY SUMMARY OF BANKING AND CREDIT MEASURES
(Averages of d a i l y f i g u r e s )

H.9
(Rev. 4 / 7 2 )

RESERVE

50
Week ended
Reserve Aggregates

Tuly ?3

1/"

Total reserves
Nonborroved r e s e r v e s
Required r e s e r v e s
R e s e r v e s A v a i l a b l e t o Support P v t . Nonbank D e p o s i t s

Monetary A g g r e g a t e s
M. ( C u r r e n c y p l u s demand d e p o s i t s )
Mj (M. p l u s time d e p o s i t s a t commercial banks
o t h e r t h a n l a r g e time CD'9)
A d j u s t e d c r e d i t proxy A'
Time d e p o s i t s , a l l commercial banks
U . S . Government demand d e p o s i t s , member banks

Other R e s e r v e Measures & I n t e r e s t

Adjusted.

Week ended
4 Wks . ended
tly 16
1 J u n e 18
J u l y 16 l J u l y 9
($ B i l . , SA)
293.2
293.6
294.3
295.2
652.3
649,
506.4
504.
440.1
439.
2.
2.9
Week ended
J u l y 23 ] J u l y 16

Rates

Member bank b o r r o w i n g s ($ rail.)
— I n c l u d e s s e a s o n a l b o r r o w i n g s of:
F e d e r a l funds r a t e
3-month T r e a s u r y b i l l r a t e
90-119 day d e a l e r p l a c e d commercial paper r a t e !*J
3-month CD r a t e ( s e c o n d a r y market) -5/
3-month E u r o - d o l l a r r a t e
U . S . Government bond r a t e 2/
M5A--Hot S e a s o n a l l y

34.96
34.57
34.69
32.87

4 Wks. ended
J u l y 23
lJune 25
($ B i L , SA)
34.73
34.92
35.11
34.63
34.72
34.69
34.53
34.85
34.90
32.96
32.89
33.00

382
19
6.14
6.19
6.35
6.51
7.09
P8.16

202
16
5.
6.
6.
6.
7.

644.6
649.9
506.7
505.9
435.6
439.4
4.2
2.4
4 Wks. ended
J u l y 23 I J u n e 25
(NSA)
420
16
6.11
6.06
6.27
6,50
7,10
P8.15

SA--Seasonally Adjusted.

Editor's note: This copy of the H.9 release does not show three additional
columns of data, which were deleted to permit more legible reproduction.

Reserve Aggregates
1. Total Reserves
The sum of assets that member banks may count to meet their legal reserve requirements. These "reserve assets" are:
(1) Balances on deposit with Federal Reserve Banks,
(2) Currency and coin owned and held, including currency and coin in transit to
or from Federal Reserve Banks.

2. Nonborrowed Reserves
Total reserves minus borrowings from Federal Reserve Banks. See line 10 under
Other Reserves Measures.

3. Required Reserves
The amount of reserves that must be held to meet the Federal Reserve System's reserve requirements against deposits and certain other items.
The Federal Reserve System requires member banks to hold reserve assets equal
to specified percentages of net demand deposits,* total time and savings deposits, and
certain liabilities (classified as ''deposits") used as a means of obtaining funds to be
used in the banking business, such as funds received through sales of finance bills,**
certain "Eurodollar borrowings"*** and funds channeled to the banks by their
affiliates in forms other than regular deposits.
The amount of required reserves that must be held in the current week (Thursday
through Wednesday) is determined by applying the various reserve requirement percentages to the daily average of "reservable" balances for the like seven-day period
two weeks before.
Reserve requirement percentages for net demand deposits are graduated. Under
the graduated schedule effective Sept. 1975, member banks were required to hold
reserves equal to the sum of IV2 percent of the first $2 million of net demand deposits, 10 percent of net demand deposits over $2 million but less thaja $10 million, 12
percent of net demand deposits over $10 million but less than $100 million, 13 percent of net demand deposits over $100 million but less than $400 million and I6V2
percent of net demand deposits over $400 million. Reserve requirements are published monthly in the Federal Reserve Bulletin.
* Net demand deposits are gross demand
deposits (as defined in Federal Reserve
Regulation D), less the sum of cash items
in the process of collection and balances
subject to immediate withdrawal due from
other banks (also as defined in Regulation
D).

** Finance bills are bankers' acceptances
ineligible for discount at a Federal Reserve
Bank. These instruments are sometimes
called "working capital acceptances/'
*** See line 16 for an explanation of
"Eurodollar borrowings."

4. Reserves Available to Support Private Nonbank Deposits (RPD)
The sum of:
(1) Required reserves for
(a) private demand deposits,
(b) total time and savings deposits,
(c) nondeposit sources subject to reserve requirements,
continued on next page

(2) Excess reserves.
This measure excludes required reserves for net interbank and U.S. Government
demand deposits.
In February 1972, the FOMC decided to experiment by placing greater emphasis
on this reserve measure as an "operating target," a variable to guide day-to-day open
market operations in Government securities. The Committee believed that doing so
might enhance their ability to achieve desired intermediate monetary objectives.
The reserve aggregate levels reported on the H.9 release are not adjusted to eliminate the effects of increases or decreases in required reserves caused by changes in
the reserve requirement percentages themselves. However, the annual rates of growth
data for the reserve aggregates reported on the release are adjusted to remove the
effects of any change in the requirements.

Monetary Aggregates
5. M ! (currency plus demand deposits)
A commonly used measure of the money the public has immediately available for
spending. Changes in the money supply are considered an important determinant of
prices, spending, production and employment.
The narrowly defined money supply (Mj) consists of:
(1) Currency and coin outside the Treasury, Reserve Banks and commercial banks,
(2) Demand deposits at all commercial banks;
except:
(a) those due to domestic commercial banks,
(b) those due to the U.S. Government;
less:*
(a) cash items in the process of collection,
(b) Federal Reserve float,
(3) Foreign demand balances at Federal Reserve Banks.**
* These two items are subtracted from demand deposits to avoid double counting.
** Foreign demand balances at Federal
Reserve Banks—due to central banks,

international institutions and a few foreign
governments—may be spent the same way
as foreign demand balances at commercial
banks. Hence, they are included in the
money supply.

M2 (M1 plus time deposits at commercial banks other than large time CDs)
A broader measure of the money the public has available for spending.
M 2 consists of Mj (line 5) plus the following deposits at commercial banks:
(1) Savings deposits,
(2) Time deposits, open account,
(3) Time certificates of deposit other than "large CDs"—negotiable certificates of
deposit issued in denominations of $100,000 or more.*
Because of the highly liquid nature of time deposits,** some economists consider
them part of the money supply and believe changes in time deposits have an influence
on income and production comparable to changes in publicly held demand deposits
and currency.

* Large CDs are excluded from M 2 , because they are considered to be more like
short-term investments, such as three-

month Treasury bills, than money balances.
** S e e l i n e 8 f o r a definition.

7. Adjusted Credit Proxy
Member bank deposit and certain other liabilities subject to reserve requirements.
Deposits subject to reserve requirements consist of:
(1) Total time and savings deposits,
(2) Total demand deposits, including U.S. Government demand deposits;
less:
(a) cash items in the process of collection,
(b) demand balances due from domestic commercial banks.
Those "other liabilities" subject to reserve requirements that are counted in the
proxy are:
(1) Net liabilities of member banks to their foreign branches and to branches in U.S.
territories and possessions,
(2) Eurodollars borrowed from foreign banks,
(3) Loans sold by member banks to their affiliates,
(4) Certain loans or participations in pools of loans sold under repurchase agreements to investors other than banks.
This measure is referred to as the "adjusted credit proxy.'' Data on bank credit—
total loans and investments of member banks—are available only on Wednesday. But
data on deposits and nondeposit liabilities subject to reserve requirements for
member banks are available on a daily average basis. Since these balances represent
the bulk of liabilities, they can be used as a timely substitute or "proxy" for daily
average bank credit data.
Changes in the proxy may nevertheless differ from shifts in total loans and investments and may reflect changes in bank assets not included in bank credit and in
liabilities not included in the proxy.*
The data reported for member bank deposits are seasonally adjusted, but nondeposit liabilities are not. Nondeposit liabilities, which are expanded or contracted as
money market conditions change, do not exhibit a stable seasonal pattern.
* Examples are changes in cash and fixed
assets, nondeposit liabilities not subject to
reserve requirements and capital accounts
of member banks. In addition, changes in

the relative proportion of total commercial
bank credit accounted for by nonmember
banks can cause divergence between loan
and investment behavior and the proxy.

Time Deposits, all Commercial Banks
Time deposits are balances the depositor cannot withdraw on "demand" but only
after a specified period.*
This item includes time deposits at all commercial banks other than deposits due
to commercial banks and the U.S. Government.
A loss or gain of time deposits has a greater impact on the lending ability of a bank
than an equal change in demand deposits. Because reserve balances required against
time deposits are much lower than those required against demand deposits, time deposits provide banks with more funds for lending or investing than demand deposits.
* Time deposits are represented by "certificates of deposit" or are in "open accounts." Certificates of deposit, negotiable
or nonnegotiable, are instruments evidencing deposits. A certificate states the
amount on deposit and the terms of repay-

ment. Open account balances may be
added to or reduced by the depositor in
accordance with a written contract specifying a minimum waiting period for repayment.

9. U.S. Government Demand Deposits, Member Banks
Demand balances maintained by the U.S. Government (Treasury) at member commercial banks, almost all in what are called "Treasury Tax and Loan accounts."
The management of U.S. Government demand deposits exerts an important influence on several monetary measures, such as the rate of growth of the narrow money
supply and the reserves of commercial banks.
Tax and Loan accounts are used by the Treasury to receive taxes paid to the
Federal Government and to receive the proceeds of certain sales of Government
securities. As individuals and corporations pay taxes or buy Treasury securities on
original issue, their demand deposits decrease and U.S. Government deposits increase. Then, as the Government spends the funds, its balances decrease and private
balances increase. Since U.S. Government deposits are not included in the money
supply, as Government balances are built up the money supply decreases; the money
supply increases as Government balances are depleted.
Tax and Loan accounts, established by the Treasury in 1914, are used to manage
the impact of Treasury receipts on bank reserves. Bank reserves are not affected by
transfers of funds from privately held demand deposit accounts to the Government's
accounts. However, as the Treasury makes expenditures from its accounts at the
Federal Reserve Banks—adding to reserves—it replenishes these balances by "calling" on its Tax and Loan account balances—subtracting reserves.
The H.9 data include only Government demand deposits at member banks.
Although the Treasury maintains Tax and Loan and other accounts at about 13,000
commercial banks, there are only about 5,800 member banks. However, member
banks hold about 90 percent of all Tax and Loan account balances.

Other Reserve Measures and Interest Rates
10. Member Bank Borrowings
Borrowings by member banks from Federal Reserve Banks (in millions of dollars).
These borrowings are used to build balances to meet reserve requirements. Member banks pay an interest rate called the "discount rate."
An increasing level of borrowings implies banks are experiencing growing pressure
on their reserve positions. Pressure can arise from policy, operational or seasonal factors, such as changes in cash or deposit flows, or open market operations. The
Federal Reserve's lending facility is a "safety valve" banks can use to adjust dayto-day reserve positions. For example, the Federal Reserve, in attempting to reduce
reserves available to the banking system, might sell Government securities. Bond
dealers buying the securities pay by check. When the checks are cleared, the reserves of the banks on which they are drawn decrease and some banks may face
reserve deficiencies. Therefore, borrowings usually increase when monetary policy is
increasingly restrictive. Conversely, borrowings usually decline when policy eases.

11. Includes Seasonal Borrowings of:
The amount of borrowings by member banks from Federal Reserve Banks to meet
specific seasonal needs for funds.*
In April 1973, the Federal Reserve established this new borrowing privilege for
member banks that demonstrate a seasonal need for funds and lack access to national
money markets. They can borrow for up to 90 days at the discount rate and renew
these loans, if their seasonal need exceeds original expectations. Such credit is ordinarily limited to the amount by which banks' seasonal needs exceed 5 percent of
average total deposits in the previous calendar year.
Since seasonal lending has no monetary policy significance, the Federal Reserve
reports separately the seasonal borrowings (line 11) included in total borrowings (line

10). Thus, the pattern of increasing or shrinking use of traditional borrowings from
the Federal Reserve can still be examined meaningfully as an indicator of the
direction of credit conditions.
* A seasonal need is one arising from an
expected pattern of movement in a bank's
deposits and loans that will persist for at
least eight consecutive weeks. For example,
many small, rural banks heavily involved in

farm loans need additional reserves at
specific times. These banks tend to experience heavy loan demand in the spring and
big deposit outflows in the fall,

12. Federal Funds Rate
The Federal funds rate is the cost of borrowing* immediately available balances for
one business day.
Banks borrow reserve balances of other banks when they want immediately available funds to meet reserve requirements, commitments on short-term loans, or to
offset unexpected drains of reserves. Banks may borrow from each other for any
period, but only one-day transactions are classified as Federal funds transactions.
Banks do not necessarily lend just "excess" reserves. Banks may lend Federal
funds even though such loans cause or increase daily reserve deficiencies. They expect to cover these deficiencies later in the settlement period.
The Federal funds rate is expressed in annual terms and is calculated on the basis
of a 360-day year. The actual interest charge for one day would be 1/360 of the
Federal funds rate. Through contacts with Federal funds brokers in New York City,
the Federal Reserve Bank of New York each day determines an "effective rate,"
which is a weighted average of the rates at which different amounts of the day's trading has occurred. The average effective rate for the week reported on this line is a
seven-day statement week average of daily effective rates. The rate on nonmarket
days (Saturday, Sunday, holidays) is the same rate as on the prior market day. For
example, in a typical week, Friday's rate is counted in the average three times to
account for Saturday and Sunday.
The Federal funds rate is sensitive to shifts in the demand for, and supply of, reserves and lendable funds in the banking system. Because the funds market is used by
many banks as a major, if not the prime, source of funds for adjusting reserve
positions, conditions in this market are a key barometer of monetary policy.
* Banks report Federal funds transactions
on their balance sheets as purchases and
sales, not as borrowings and loans.

13. 3-Month Treasury Bill Rate
The five-day statement week average of the bid rates quoted by dealers at the close of
the Government securities market on each day of the statement week. The rates are
on a discount basis and, thus, understate the actual investment yield.*
Treasury bills are highly liquid. They can be sold for cash quickly and easily and
offer investors an interest return with virtually no risk of loss due to default. For these
reasons, Treasury bills are purchased by most financial institutions, major corporations and state and local governments with temporarily idle cash balances.
Treasury bills also play an important role in implementing monetary policy. Most
of the System's transactions with primary dealers in U.S. Government securities are
in Treasury bills.
Because the new issue bill rate is a basic indicator of the price the most risk-free
borrower—the U.S. Government—must currently pay to borrow money, most other
loan costs of comparable maturity tend to be scaled upward from this rate.
footnotes on next page

* Treasury bills are sold on a discount
basis—at less than face value—rather than
carrying a fixed coupon rate. This method,
used since Treasury bills were first issued
in 1929, had its roots in two problems the
Treasury experienced in marketing fixed
coupon rate certificates in the 1920s. The
coupon rates had to be adjusted from issue
to issue, and, because payments from
banks purchasing the certificates were
made by credits to special accounts, the
Treasury often paid interest on idle balances. The Treasury bill eliminated the
pricing problem, enabling the Treasury to
match bill sales with cash needs, and avoid
payment of interest on idle funds.
The "return" on a Treasury bill is the
difference between the purchase price and
the face amount received at maturity. This

difference, or "discount'' can be expressed
in terms of an "annual rate of return" by
dividing the result by the fraction of the
year representing the bill's maturity. A
360-day year is used for computation.
This method of calculating the return
on a Treasury bill, known as the "bank
discount basis," understates the "investment yield" or "bond equivalent return"
because only the amount paid—and not
the face amount—is actually invested. On
a coupon or bond equivalent yield basis—
that is if the face amount of the bill was
actually invested—the return would be
somewhat higher. In addition, the coupon
equivalent basis return is computed on a
365-day year, which also distorts the discount basis return slightly.

14. 90-119-Day Dealer-Placed Commercial Paper Rate
A five-day statement week average of the offering rates, on a discount basis, of commercial paper dealers for the unsecured promissory notes of corporations with "Aa"
bond ratings that mature in three to four months.
Commercial paper is the designation for unsecured, short-term negotiable promissory notes issued by nonbank business institutions and sold to investors, usually other
companies.
"Dealer-placed" commercial paper refers to the marketing method used by issuers.
They sell notes to dealers, who then sell the notes on the secondary market. Most
dealer-placed paper is issued by manufacturing corporations, public utilities and
small finance companies, usually to meet short-term operating requirements.
Five primary dealers in commercial paper report offering rates, the rate at which
they are willing to sell, to the Federal Reserve Bank of New York daily. The rate
reported on the H.9 release is a five-day statement week average of the daily figures
reported. The daily figure is the representative rate—the rate common to three of the
five dealers. When no consensus is available, the midpoint of the range, rounded up
to the nearest Vs percentage point, is used.

15. 3-Month CD Rate (secondary market)
A seven-day statement week average of dealer offering rates in the secondary market
for negotiable certificates of deposit with a three-month maturity. Five dealers in
Government securities who also handle CDs each quote a rate daily to the Federal
Reserve Bank of New York. The midpoint between the highest and lowest quotes is
selected as the rate for the day. Friday's midpoint is applied to Saturday and Sunday
in determining the seven-day statement week average.
A negotiable certificate of deposit, or CD, is a marketable instrument evidencing
funds deposited in a bank for a specified period of time at a fixed interest rate. The
owner of the CD at the end of the time period receives the principal and the interest.
Because these CDs are marketable, the owner may obtain the funds before maturity
by selling the instrument in the secondary market. The negotiable CD was designed
by the major money market banks to attract corporate deposits and enable the banks
to compete more effectively for short-term funds.
The largest banks in New York City and Chicago are the major sellers of CDs
in the "primary" market. Corporations, state and local governments, foreign governments and central banks, and individuals rank in order as the major buyers.
Since owners of short-term funds are responsive to interest rate differentials, the
secondary market CD rate is a good indicator of the cost of short-term funds.

16. 3-Month Eurodollar Rate
A five-day statement week average of the interest rate banks outside the U.S. are
paying for three-month dollar deposits. Eurodollars are dollar-denominated deposits,
generally interest bearing, on the books of banking offices outside the United
States. The Eurodollar market is a worldwide market in whicV buyers and sellers
(borrowers and lenders) quote their bids and offers for the use of the dollars for varying time periods. The largest and most highly developed market is in London.
Commercial banks in the United States use the Eurodollar market as a source of
funds to bolster reserve positions, particularly when monetary policy is restrictive
and loan demand is high.
U.S. banks borrow Eurodollars primarily from their overseas branches. Head
offices of the major money market banks instruct their overseas branches (mainly in
London) to bid for Eurodollar deposits of a specific maturity. When the branch
acquires the dollar deposits, it "lends" the funds to the head office, "charging" the
head office the interest paid to secure the deposit. Eurodollars may also be borrowed
from foreign banks.
Eurodollar borrowings are not entered as deposits on the books of U.S. banks.
Banks borrowing Eurodollars from their own branches include them on their books
in "liabilities to foreign branches." Eurodollars borrowed from others are included
in "other liabilities."
Since October 1969, these borrowings have been subject to a special reserve
requirement.

17. U.S. Government Bond Rate
The average yield on 20-year U.S. Government bonds. The figure reported on this
release is a five-day statement week average based on the daily closing "bids" of primary dealers in Government securities. The bid is the highest price the dealer is willing to pay; in effect, the lowest yield—or rate of return—acceptable.
U.S. Government bonds are long-term marketable obligations of the Treasury,
with principal and interest guaranteed by the United States. The term "yield" refers
to the effective investment return on the security—the percentage of the purchase
price the annual fixed interest payments represent.

written by David H. Friedman

Federal Reserve Bank of New York, Public Information Department, 33 Liberty Street, New York, N.Y. 10045, October 1975

Full text of Glossary, Weekly Federal Reserve Statements

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