DEFINITION of 'Interdistrict Settlement Account'

A clearing account that the Federal Reserve maintains to facilitate fund transfers between the 12 Federal Reserve banks located throughout the country. The account is domiciled in Washington D.C. This account is reserved solely for the use of the 12 member banks.

BREAKING DOWN 'Interdistrict Settlement Account'

The settlement account for each separate bank is either debited for each transaction with a due from entry or credited with a due to entry. These entries are settled on a net basis each day in order to keep fund transfers between member banks to a minimum.

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RELATED FAQS
  1. What do banks do to control the bank reserve?

    Understand what the Federal Reserve does in order to expand or contract the economy. Learn what depository institutions can ... Read Answer >>
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    Learn how bank reserve requirements are determined and how bank reserves affect shareholders through improved bank stability ... Read Answer >>
  3. Who determines the reserve ratio?

    Understand what the Federal Reserve is and what it regulates in the U.S. economy. Learn about the reserve ratio and how the ... Read Answer >>
  4. Why would the Federal Reserve change the reserve ratio?

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  5. How do central banks acquire currency reserves and how much are they required to ...

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