FepeEraL RESERVE AcT 
Ri ec 
Refunding Bonds 
Sec. 18. After two years from the passage of this Act, and at any time during a 
period of twenty years thereafter, any member bank desiring to retire the whole or any 
part of its circulating notes, may file with the Treasurer of the United States an appli- 
cation to sell for its account, at par and accrued interest, United States bonds securing 
circulation to be retired. 
The Treasurer shall, at the end of each quarterly period, furnish the Federal Reserve 
Board with a list of such applications, and the Federal Reserve Board may, in its dis- 
cretion, require the Federal reserve banks to purchase such bonds from the banks whose 
applications have been filed with the Treasurer at least ten days before the end of any 
quarterly period at which the Federal Reserve Board may direct the purchase to be 
made: Provided, That Federal reserve banks shall not be permitted to purchase an 
amount to exceed $25,000,000 of such bonds in any one year, and which amount shall 
include bonds acquired under section four of this Act by the Federal reserve bank. 
Provided further, That the Federal Reserve Board shall allot to each Federal reserve 
bank such proportion of such bonds as the capital and surplus of such bank shall bear 
to the aggregate capital and surplus of all the Federal reserve banks. 
Upon notice from the Treasurer of the amount of bonds so sold for its account, each 
member bank shall duly assign and transfer, in writing, such bonds to the Federal 
reserve bank purchasing the same, and such Federal reserve bank shall, thereupon, 
deposit lawful money with the Treasurer of the United States for the purchase price 
of such bonds, and the Treasurer shall pay to the member bank selling such bonds any 
balance due after deducting a sufficient sum to redeem its outstanding notes secured by 
such bonds, which notes shall be canceled and permanently retired when redeemed. 
The Federal reserve banks purchasing such bonds shall be permitted to take out an 
amount of circulating notes equal to the par value of such bonds. 
Upon the deposit with the Treasurer of the United States of bonds so purchased, 
or any bonds with the circulating privilege acquired under section four of this Act, 
any Federal reserve bank making such deposit in the manner provided by existing law, 
shall be entitled to receive from the Comptroller of the Currency circulating notes in 
blank, registered and countersigned as provided by law, equal in amount to the par 
value of the bonds so deposited.! Such notes shall be the obligations of the Federal 
reserve bank procuring the same, and shall be in form prescribed by the Secretary of 
the Treasury, and to the same tenor and effect as national-bank notes now provided by 
law. They shall be issued and redeemed under the same terms and conditions as 
hational-bank notes except that they shall not be limited to the amount of the capital 
stock of the Federal reserve bank issuing them. 
Upon application of any Federal reserve bank, approved by the Federal Reserve 
Board, the Secretary of the Treasury may issue, in exchange for United States two per 
centum gold bonds bearing the circulation privilege, but against which no circulation 
Is outstanding, one-year gold notes of the United States without the circulation privi- 
lege, to an amount not to exceed one-half of the two per centum bonds so tendered for 
"Under act of Apr. 23, 1918, Federal reserve banks may issue Federal reserve bank notes in soy 
denominations, including $1 and $2, against the security of United States certificates of indebted= 
ess to the extent permitted by that act. 
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