Technological advances have reduced float by enabling faster processing of checks. Funds now spend less time waiting for transfer by banking institutions. Paper checks are becoming increasingly less common, further reducing float by minimizing transportation of checks and eliminating delays caused by bad weather and the need for processing. Busy banking days and months often result in slowed processing and significant backlogs within the financial system. When this occurs, checks wait for recognition and funds may be double-counted. Until the transaction is complete, the financial system may consider the money to belong both to the recipient checking account and the party issuing the check. One dollar may be counted as two, making monetary policy more complicated. Float may eventually disappear as technology makes it less of an issue. On weekends, banking institutions are usually closed and unable to quickly process checks written on Saturdays and Sundays. Historically, these checks would wait for the next business day and create a backlog of paper checks waiting for processing by a bank employee on Monday. Technology is significantly alleviating these problems and making it easier for the Federal Reserve to track the health of the financial system.

The Federal Reserve Bank creates forecasts of float in the U.S. banking system to help in key policy decisions. The exact amount of float is difficult to track at any given time, so estimates are important in determining approximately how much money is actually in circulation. In the 1970s, float reached highs of $6.6 billion on average, every day. This subsequently declined to $774 million daily by 2000.

  1. What months of the year typically have the highest float?

    Learn more about how float occurs within the United States and how it is monitored. Find out why float frequently happens ... Read Answer >>
  2. What is the difference between holdover float and transportation float?

    Find out about float, which may become a thing of the past due to the steady decline of check writing and new services in ... Read Answer >>
  3. What does floating stock tell traders about a particular stock?

    Learn about what floating stock tells a trader about a particular stock. One commonality of the biggest winners in stock ... Read Answer >>
  4. What exactly is a company's float?

    The term "float" refers to the regular shares that a company has issued to the public that are available for investors to ... Read Answer >>
  5. What is the difference between shares outstanding and floating stock?

    Learn about shares outstanding, floating stock, how to calculate a company's floating stock and the difference between shares ... Read Answer >>
  6. What percentage of a company's float can be shorted?

    The quick answer is that the amount of shares shorted can actually exceed 50% of the float in a company. The percentage of ... Read Answer >>
Related Articles
  1. Investing

    Calculating Floating Stock

    Floating stock is the number of shares a company has available for trade in the open market.
  2. Investing


    Float is money in the banking system that is briefly counted twice due to delays in processing checks.
  3. Investing

    Float Over to Floating Rate ETFs

    Floating rate notes are another avenue for bond investors to consider when it comes to reducing interest rate risk.
  4. Investing

    Floating Rate Loans Look Attractive

    The search for income continues to remain a major priority for investors, as interest rates still sit at historically low levels. In order to get yield, many have moved up the maturity ladder. ...
  5. Trading

    Understanding the Floating Exchange Rate

    Floating exchange rate is the exchange rate between two currencies at any given time.
  6. Investing

    Is it Time to Buy Floating Rate Bonds?

    The Fed’s awaited interest rate hike could finally be at hand. Are floating rate bonds the way to go?
  7. Trading

    Dual And Multiple Exchange Rates 101

    Why would a country choose to implement dual or multiple exchange rates? It's risky, but it can work.
  8. Trading

    Currency Exchange: Floating Rate Vs. Fixed Rate

    Baffled by exchange rates? Wonder why some currencies fluctuate while others are pegged? This article has the answers.
  9. Personal Finance

    How to Cancel a Check

    If you've had a personal check lost or stolen, the next best step is to cancel the check by calling your bank and putting a stop payment on the check.
  10. Trading

    Interest Rate Swaps Explained

    Plain interest rate swaps that enable the parties involved to exchange fixed and floating cash flows.
  1. Float

    Float is money in the banking system that is briefly counted ...
  2. Federal Reserve Float

    Refers to the over-estimation of the country's money supply due ...
  3. Availability Float

    The time period between when a deposit is made and when the funds ...
  4. Negative Float

    The period of time between when a bank customer writes a check ...
  5. Float Time

    The amount of time between when an individual writes and submits ...
  6. Floating Stock

    The number of shares available for trading of a particular stock. ...
Trading Center