Data Bases • Custom Term Papers • Free Term Papers • Free Research Papers • Free Essays • Free Book Reports • Plagiarism? Links • Top 100 Term Paper Sites • Top 25 Essay Sites • Top 50 Essay Sites • Search 97,000 Papers @ DirectEssays.com • Search 101,000 Papers @ ExampleEssays.com • Search 90,000 Papers @ MegaEssays.com Free Essays • Term Paper Sites • Chuck III's Free Essays • Free College Essays • TermPaperSites.com • My Term Papers • Get Free Essays • Essay World • Planet Papers	Search Lots of Essays Back to Subjects - Government & Politics Banking Services of the Federal Reserve System Banking Services of the Federal Reserve System Banking Services of the Federal Reserve System The Federal Reserve System (FRS) is a bank that was founded in 1913. It was founded by Congress for the purpose of providing the nation with a more sophisticated and secure financial system. The FRS has duties that fall into four areas. They are conducting the nation’s monetary policy, supervising and regulating banking institutions, maintaining the financial system’s stability, and providing certain financial services to the U. S. Government, financial institutions, public, and foreign officials. Banking services provides a payment system that is the largest in the world. The Federal Reserve banking system is a faster way to settle payment transactions. There are several things that the Federal Reserve banking system can do that provide services that you and I can use. The fastest way the FRS can help you out is by the Electronic Funds Transfer (EFT). This is also a more secure method rather than by check or cash. The two types of services that the EFT offer are known as the Automated Clearinghouse (ACH), and Fedwire. The ACH was developed mutually by the FRS and the private sector in the early 1970’s. The ACH is a more professional alternative to checks. Since the 1970’s, the ACH has become a nationwide organization. There are ACH credit and debit transfers that can by used by businesses and consumer’s. ACH payments are sent out in groups to the FRS processing center. The FRS provides ACH services to all depository institutions. Both the Government and commercial sectors use the ACH. Ach transfers are less costly when compared to checks. Fedwire allows depository institutions to transfer funds on behalf of their customers, and are transferred in seconds. Fedwire funds, unlike the ACH, are processed individually, and 99% are made on-line, although there are still a few banks who make the transaction over the phone. Even thought the EFT is the faster way of doing things, there are a few simpler ways to use the banking system. Cash services are the most simple and most important function of the FRS. The system makes sure that there is enough currency and coin flowing to meet the needs of the banks and consumers. All currency is in the form of Federal Reserve notes. These notes are obligations of the U. S. Government, and are designed and printed by the Bureau of Engraving and Department of Treasury. There are twelve Federal Reserve banks that are approved by the Federal Reserve Act to issue the currency that is made. What happens if the currency is thought to be counterfeit after being in circulation? Along with the bills that have been worn through use, suspected counterfeit bills are placed aside for later inspection. If, in fact, they are counterfeit, then the bills are destroyed and the face value is subtracted from the total value of the Federal Reserve notes. When people think of bank transactions, they usually think of coins and dollar bills as the form of transaction, but what about check transactions? Since checks are not considered as currency and coin, how are they transacted? Checks would fit into the non-cash transactions along with the EFT. Checks that are collected through the FRS are credited to the place where the check has been sent. If the check happened to be an interbank check, the process would take a little longer. The reason is is because the check has to go through the other banks and depository institutions that are involved with that particular check. In the 1970’s, the FRS introduced a program that would improve the efficiency of check clearing. This program increased the number of facilities to enable the FRS to collect more checks in a faster time period. These programs are located at each of the Reserve banks, except the one in New York. There are new ways of check processing today that has made this system almost as modernized as it can get. Not all transactions are made by writing a check or paying with cash though. Net settlements allow groups to give checks directly to the payor institutions without having to go through all of the extra work. There are two types of settlement services that are available. On one hand, a person can have an agent representing them. The agent will give the bank the net credit and net debit that person has. The bank then posts the entries as is to the institution’s Federal Reserve accounts. On the other hand, the institution will tell the person about his situation. Then, Fedwire will send the funds to credit and take away when necessary. There are many things banks do that we think nothing of. We usually just deposit or take out money and go on with our everyday lives not knowing what the process is that banks go through. Banking services have evolved over the years and it has made banking and banking services much more easier than they used to be. Let’s just hope that we keep advancing and never have to go back to the way it used to be!! Bibliography: Word Count: 890
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