CHECK CLEARING AND COLLECTION
Lye following is a transcript of the Federal Reserve Board’s
Regulation J, Series of 1924.
Section 16 of the Federal Reserve Act authorizes the Federal Re-
serve Board to require each Federal Reserve Bank to exercise the
function of a clearing house for its member banks, and section 18 of
the Federal Reserve Act, as amended by the act approved June 21,
1917, authorizes each Federal Reserve Bank to receive from any non-
member bank or trust company, solely for the purposes of exchange
or of collection, deposits of current funds in lawful money, national
bank notes, Federal Reserve notes, checks and drafts payable upon
presentation, or maturing notes and bills, provided such non-menber
bank or trust company maintains with its Federal Reserve Bank a
balance sufficient to offset the items in transit held for its account by
the Federal Reserve Bank.
In pursuance of the authority vested in it under these provisions of
law, the Federal Reserve Board, desiring to afford both to the public
and to the various banks of the country a direct, expeditious, and
economical system of check collection and settlement of balances, has
arranged to have each Federal Reserve Bank exercise the functions of
a clearing house and collect checks for such of its member banks as
desire to avail themselves of its privileges and for such non-member
State banks and trust companies as may maintain with the Federal
Reserve Bank balances sufficient to qualify them under the provisions
of section 13 to send items to Federal Reserve Banks for purposes of
exchange or of collection. Such non-member State banks and trust
companies will hereinafter be referred to as non-member clearing
banks.
Each Federal Reserve Bank shall exercise the functions of a clearing
house and collect checks under the general terms and conditions here-
inafter set forth.
Section 111. Checks Received for Collection
|—Each Federal Reserve Bank will receive at par from its member banks and
from nonmenber clearing banks in its district, checks!? drawn on all member
and nonmember clearing banks, and checks drawn on all other nonmember
banks which are collectable at par in funds acceptable to the Federal Reserve
Bank of the district in which such nonmember banks are located.
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