Edge Act Corporation


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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  1. What risks do organizations face when engaging in international finance activities?

    When an organization decides to engage in international financing activities, they also take on additional risk as well as ... Read Full Answer >>
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  3. When was the last time the Federal Reserve hiked interest rates?

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