IDEAS home Printed from https://ideas.repec.org/p/fip/fedcfs/96-03.html
   My bibliography  Save this paper

The founders' intentions: sources of the payments services franchise of the Federal Reserve banks

Author

Listed:
  • E.J. Stevens

Abstract

The reserve banks’ check collection service was designed in 1913 to serve as "glue," attaching the new central bank to the commercial and financial markets through member banks. Successful creation and operation of the Federal Reserve System was thought to be more likely if the reserve banks could do more for member banks than lend occasionally and administer the reserve requirement tax. Initial drafts of the Federal Reserve Act would have allowed member banks to use required reserve deposits only for making interbank transfers. But correspondent banking relationships already provided interbank payment service, as well as check collection and other services, while offering a modest interest rate on interbank deposits. Nationwide check collection service was added to the bill in the latter days of the legislative process to show potential member banks that deposits maintained at the new regional reserve banks could play an integral part in the banking business.

Suggested Citation

  • E.J. Stevens, 1996. "The founders' intentions: sources of the payments services franchise of the Federal Reserve banks," Financial Services working paper 96-03, Federal Reserve Bank of Cleveland.
  • Handle: RePEc:fip:fedcfs:96-03
    as

    Download full text from publisher

    File URL: http://www.clevelandfed.org/research/FSRG/fsrg03.pdf
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. R. Alton Gilbert, 1999. "Effects of Federal Reserve services on the efficiency of the system for collecting checks in the United States: 1915--30," Working Papers 1999-014, Federal Reserve Bank of St. Louis.
    2. Jeffrey M. Lacker, 1997. "The check float puzzle," Economic Quarterly, Federal Reserve Bank of Richmond, issue Sum, pages 1-26.

    More about this item

    Keywords

    Payment systems ; Check collection systems ; Federal Reserve Act;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedcfs:96-03. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (4D Library). General contact details of provider: http://edirc.repec.org/data/frbclus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.