Interdistrict Settlement Account
The Interdistrict Settlement Account ( ISA ) is a settlement account of the Federal Reserve System , through which only interbank transfers between the 12 Federal Reserve banks are processed. It is operated by the Federal Reserve Board in Washington, DC .
The processing of payment transactions results in claims and liabilities between the Fed banks. Wire transfers initiated by a Fed Bank result in liabilities to that Fed Bank. However, transfers received by a Fed Bank result in claims against the sending Fed Bank. Every day the receivables and liabilities are offset against each other and lead to either positive or negative ISA balances.
Once a year in April, collateral in the Open Market Account system is reallocated between the Fed banks. The distribution depends on how high a Fed's ISA balances are.
Offsetting is done through the transfer of ownership of secure securities or through gold certificates. In a paper by the Federal Reserve Bank of Richmond it is stated that without the annual compensation the Federal Reserve District of New York would show an increasing ISA balance, similar to the TARGET2 system Germany and some other states.
Web links
Individual evidence
- ^ Ifo Institute , October 5, 2012: Statement by the Ifo Institute on allegations from the book "The Law of Crisis" by Susanne Schmidt
- ^ A b Alexander L. Wolman, "Federal Reserve Interdistrict Settlement", Federal Reserve Bank of Richmond Economic Quarterly, Volume 99, Number 2ó Second Quarter 2013, pp. 117–141