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  4. Reduction and Pricing of Federal Reserve Float
  5. MIDWEEK CLOSINGS AND NONSTANDARD HOLIDAYS
9-1581

MIDWEEK CLOSINGS AND NONSTANDARD HOLIDAYS

Reserve Banks have three options to deal with float arising from midweek closings and nonstandard holidays. First, a Reserve Bank could modify its availability schedule for local depositors so that credit for checks drawn on closed institutions would be deferred one additional day.4 Second, a Reserve Bank could modify its current practice of posting funds received for the account of the institution on the day the institution is closed. A one-day deferral of credits received on the day the institution is closed would offset some of the float arising from midweek closings and nonstandard holidays. Finally, Reserve Banks could price all or any remaining float arising from midweek closings or nonstandard holidays in the same manner as holdover float. The value of this float would be added to the cost of the check-collection service. The Board intends to monitor float associated with midweek closings to determine whether it is increasing to any significant extent.
4
It would be operationally infeasible for Reserve Banks to delay credit on interterritory checks drawn on closed banks, because each Reserve Bank would be required to keep track of every bank in the country that is closed.
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