Interdistrict Settlement Account

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.