Section 16 of the Federal Reserve Act requires the Reserve Banks to collateralize currency with Bank assets and specifies the categories or types of eligible collateral. Applicable collateral can consist of any assets on the balance sheets of the Federal Reserve Banks, which include, but are not limited to, gold certificates, special drawing rights ("SDRs"), U.S. Treasury securities, assets (including foreign currency) acquired under section 14 of the Federal Reserve Act, and loans extended by Reserve Banks. In practice, gold certificates, SDRs, and Treasury, agency, and mortgage-backed securities are pledged first, followed by any other Federal Reserve Bank assets. The amount on the line "other assets pledged" is, in effect, a residual number. It represents the total amount of currency that is not collateralized by gold certificates, SDRs, or Treasury, agency, and mortgage-backed securities. Return