National Bank

A A A

DEFINITION

In the United States, a commercial bank chartered by the comptroller of the currency of the U.S. Treasury. A national bank functions as a member bank of the Federal Reserve in the capacity of investing member of its district Federal Reserve Bank. These banks may facilitate the auction process of U.S. Treasury bonds and must be members of the Federal Deposit Insurance Corporation (FDIC).

Internationally, "national bank" is synonymous with "central bank," or a bank controlled by the national government of a country. Central banks set monetary policies within national economies.

INVESTOPEDIA EXPLAINS

National banks in both structures have an important role in that they help structure a country's financial system. Having an efficient banking system, whether through a central bank or the Federal Reserve, is important to the financial stability of a country's economy.

National banks also facilitate daily transactions with their local Federal Reserve Bank, such as Fed bank wires. They must generate call reports to the Fed each quarter and also make the reports public.

The first national bank in the U.S. was founded under the plans of George Washington.


RELATED TERMS
  1. Federal Reserve Bank

    The central bank of the United States and the most powerful financial institution ...
  2. National Bank Surveillance System

    A computerized monitoring system developed and implemented in 1975 by the U.S. ...
  3. Article XII Company

    An investment company chartered under Article XII of the New York State Banking ...
  4. Swiss National Bank

    The Swiss National Bank is the bank that is responsible for setting Switzerland's ...
  5. Commercial Bank

    A financial institution that provides services, such as accepting deposits, ...
  6. Federal Deposit Insurance Corporation ...

    The U.S. corporation insuring deposits in the U.S. against bank failure. The ...
  7. Federal Reserve System - FRS

    The central bank of the United States. The Fed, as it is commonly called, regulates ...
  8. Bank Wire

    An electronic message system allowing major banks to communicate various actions ...
  9. Agreement Corporation

    A type of bank chartered by a state to engage in international banking. The ...
  10. Central Bank

    The entity responsible for overseeing the monetary system for a nation (or group ...
Related Articles
  1. Inside National Payment Systems
    Economics

    Inside National Payment Systems

  2. How The U.S. Government Formulates Monetary ...
    Personal Finance

    How The U.S. Government Formulates Monetary ...

  3. Get To Know The Major Central Banks
    Forex Education

    Get To Know The Major Central Banks

  4. Demystification Of Bank Accounts
    Options & Futures

    Demystification Of Bank Accounts

  5. Where can I buy government bonds?
    Investing

    Where can I buy government bonds?

  6. The Federal Reserve
    Economics

    The Federal Reserve

  7. The Rate Rise Timeline to Watch for ...
    Economics

    The Rate Rise Timeline to Watch for ...

  8. How Banks Set Interest Rates On Your ...
    Investing Basics

    How Banks Set Interest Rates On Your ...

  9. Questions For U.S. Stock ETF Bulls
    Economics

    Questions For U.S. Stock ETF Bulls

  10. Japan ETFs May Radiate To Further Weaken ...
    Mutual Funds & ETFs

    Japan ETFs May Radiate To Further Weaken ...

comments powered by Disqus
Hot Definitions
  1. Cash and Carry Transaction

    A type of transaction in the futures market in which the cash or spot price of a commodity is below the futures contract price. Cash and carry transactions are considered arbitrage transactions.
  2. Amplitude

    The difference in price from the midpoint of a trough to the midpoint of a peak of a security. Amplitude is positive when calculating a bullish retracement (when calculating from trough to peak) and negative when calculating a bearish retracement (when calculating from peak to trough).
  3. Ascending Triangle

    A bullish chart pattern used in technical analysis that is easily recognizable by the distinct shape created by two trendlines. In an ascending triangle, one trendline is drawn horizontally at a level that has historically prevented the price from heading higher, while the second trendline connects a series of increasing troughs.
  4. National Best Bid and Offer - NBBO

    A term applying to the SEC requirement that brokers must guarantee customers the best available ask price when they buy securities and the best available bid price when they sell securities.
  5. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin account. In the context of the NYSE and FINRA, after an investor has bought securities on margin, the minimum required level of margin is 25% of the total market value of the securities in the margin account.
  6. Leased Bank Guarantee

    A bank guarantee that is leased to a third party for a specific fee. The issuing bank will conduct due diligence on the creditworthiness of the customer looking to secure a bank guarantee, then lease a guarantee to that customer for a set amount of money and over a set period of time, typically less than two years.
Trading Center