Financial Services of the FED
Shriya Shah :)
Automated Clearinghouse (ACH)
- What is the ACH?
A type of electronic payment network which is used by depository institutions to send each other electronic credit and debit transfers
· payroll deposits
· corporate payments to vendors
· Social Security payments
· insurance premium payments and utility payments
- large-dollar electronic payment system
- transfers funds between financial institutions
- used by people to repay large loans or to settle real estate transactions.
- most of the Fedwire transactions are initiated on-line
- a depository institution may send the checks for collection to a Federal Reserve Bank when it receives deposits of checks drawn on other institutions
- How is it done electronically?
Banks can now make an image of a check, send the image electronically to another location and then print a substitute check from the image to present for payment locally.
keeping money in circulation
- The FED accepts deposits and distributes cash
- notes that are suspected of being counterfeit are destroyed using a shredding machine and its face value is deducted from the total amount of Federal Reserve notes
- 12 federal reserve banks are authorized to issue money
How does it help the U.S government?
- sells and redeems government securities (Savings Bonds and Treasury bills)
- Maintains accounts for U.S. Treasury
- Processes government checks, postal money orders and U.S. savings bonds
- Collects federal tax deposits
- This is a a contract evidencing a loan made to the United States
- millions of U.S. savings bonds each year are issued by the Fed on behalf of the Treasury