DEFINITION of 'Non-Member Banks'

A bank that is not a member of the U.S. Federal Reserve System. As with member banks, non-member banks are subject to reserve requirements, which they have to maintain by placing a percentage of their deposits at a Federal Reserve Bank. Although non-member banks are not required to purchase stock in their district Federal Reserve banks, they have access to Fed services such as its discount window on the same terms as member banks.

BREAKING DOWN 'Non-Member Banks'

Non-member banks can only be state-chartered, since all nationally chartered banks necessarily have to be members of the Federal Reserve System. Because state banking laws are arguably less onerous than federal banking laws, non-member banks may be subject to less regulation than member banks.

RELATED TERMS
  1. Non-Member Trader

    A person or entity that does not have trading privileges or an ...
  2. National Bank

    In the United States, a commercial bank chartered by the comptroller ...
  3. Federal Reserve Bank Of Philadelphia

    The Federal Reserve Bank located in Philadelphia that is responsible ...
  4. Federal Reserve Bank Of Dallas

    The Federal Reserve Bank located in Dallas, which is responsible ...
  5. Bank Reserve

    Bank reserves are the currency deposits which are not lent out ...
  6. Basel Committee On Bank Supervision

    A committee established by the central bank governors of the ...
Related Articles
  1. Personal Finance

    What's the Federal Funds Rate?

    The federal funds rate is the interest rate banks charge each other for overnight loans to meet their reserve requirements.
  2. Trading

    Explaining the Federal Reserve System

    The Federal Reserve System is the central bank of the United States. It regulates monetary policy and supervises the nation’s banking system.
  3. Personal Finance

    Explaining the Reserve Ratio

    Reserve ratio is the amount of cash a bank must keep in its bank vaults or deposit into a central, governing bank.
  4. Insights

    OPEC Wants Russian Output Concessions

    In an effort to salvage its plan to cut production by members, OPEC has sent delegations to non-member Russia in order to secure an output agreement.
  5. Personal Finance

    Explaining the Federal Discount Rate

    The federal discount rate is the rate at which eligible banks or other depository institutions can borrow funds from a Federal Reserve bank.
  6. Personal Finance

    What Does a Central Bank Do?

    A central bank oversees a nation’s monetary system.
  7. Investing

    How The U.S. Government Formulates Monetary Policy

    Learn about the tools the Fed uses to influence interest rates and general economic conditions.
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 >>
  2. How are bank reserve requirements determined and how does this affect shareholders?

    Learn how bank reserve requirements are determined and how bank reserves affect shareholders through improved bank stability ... Read Answer >>
  3. What is the structure of the U.S. Federal Reserve Bank?

    Wonder how the U.S. Federal Bank began and how it works today? Learn how this complex system is structured and how it works ... Read Answer >>
  4. How do central banks acquire currency reserves and how much are they required to ...

    A currency reserve is a currency that is held in large amounts by governments and other institutions as part of their foreign ... Read Answer >>
  5. How does the Federal Reserve's set discount rate affect my personal finances?

    Discover how the Federal Reserve implements its chosen monetary policy through its discount rates, and how these actions ... Read Answer >>
  6. Why would the Federal Reserve change the reserve ratio?

    Understand the Federal Reserve's monetary policy and the tools it uses to change that monetary policy. Learn about the reserve ... Read Answer >>
Hot Definitions
  1. Price Elasticity Of Demand

    A measure of the relationship between a change in the quantity demanded of a particular good and a change in its price. Price ...
  2. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
  3. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Down Round

    A round of financing where investors purchase stock from a company at a lower valuation than the valuation placed upon the ...
  6. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
Trading Center