National Bank

AAA

DEFINITION of 'National Bank'

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 Bank'

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 ...
  2. National Bank Surveillance System

    A computerized monitoring system developed and implemented in ...
  3. Article XII Company

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

    The Swiss National Bank is the bank that is responsible for setting ...
  5. Central Bank

    The entity responsible for overseeing the monetary system for ...
  6. Commercial Bank

    A financial institution that provides services, such as accepting ...
Related Articles
  1. Economics

    The Federal Reserve

  2. The global interconnection of U.S. payment systems makes commerical and financial transfers possible.
    Economics

    Inside National Payment Systems

  3. Personal Finance

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

  4. Forex Education

    Get To Know The Major Central Banks

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center