Private Sector Adjustment Factor - PSAF

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DEFINITION of 'Private Sector Adjustment Factor - PSAF'

A method used by the Federal Reserve Board for calculating the costs of Federal Reserve banks providing services to depository institutions. The services provided include checks, Automated Clearing House, Fedwire funds and Fedwire securities.

The Monetary Control Act of 1980 requires the Fed to recover both the direct and indirect costs of providing these services plus the imputed costs that would have been incurred if the services were provided by the private sector.

INVESTOPEDIA EXPLAINS 'Private Sector Adjustment Factor - PSAF'

The Fed reviews its PSAF methodology periodically to make sure it is current with changes in the banking industry. In 2009, the Fed considered changing the current correspondent-bank model underlying the PSAF calculation.

RELATED TERMS
  1. Federal Reserve Bank

    The central bank of the United States and the most powerful financial ...
  2. Private Sector

    The part of the economy that is not state controlled, and is ...
  3. Monetary Control Act

    Title 1 of a two-title act passed in 1980 that represented the ...
  4. Depository Institutions Act of ...

    A law passed by Congress with the intent of making savings and ...
  5. Federal Reserve Board - FRB

    The governing body of the Federal Reserve System. The seven members ...
  6. Fedwire

    A real-time gross settlement system (RTGS) of central bank money ...
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