Edge Act Corporation

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DEFINITION of 'Edge Act Corporation'

A banking institution with a special charter from the U.S. Federal Reserve to conduct international banking operations and certain other forms of business without complying with state-by-state banking laws. By setting up or investing in Edge Act corporations, U.S. banks are able to gain portfolio exposure to financial investing operations not available under standard banking laws.

BREAKING DOWN 'Edge Act Corporation'

Edge Act corporations have gone through structural changes since they were first implemented in 1919. Economies, and therefore financial institutions, are much more international today, and many of the restrictions once in place limiting foreign banking activity have since been relaxed. Edge Act revisions in 1984 allowed companies engaged in international business, such as trading and shipping firms, and international airlines, to provide full banking services, including taking deposits and granting loans. The Federal Reserve retains the right to monitor ownership of these corporations and their future investment and business activities.

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RELATED FAQS
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    Contrary to conventional wisdom, the Federal Reserve is extensively audited. Politicians on the left and right of a populist ... Read Full Answer >>
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    The U.S. Treasury decides to print money in the United States as it owns and operates printing presses. However, the Federal ... Read Full Answer >>
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    The U.S. Constitution does not mention the need for a central bank, nor does it explicitly grant the government the power ... Read Full Answer >>
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