Payment System and Reserve Bank Oversight

The Federal Reserve performs several key functions to maintain the integrity of the U.S. payment and settlement system. These functions help keep cash, check, and electronic transactions moving reliably through the U.S. economy on behalf of consumers, businesses, and others participating in the economy.

The Federal Reserve Banks, in particular, provide payment services to depository and certain other institutions, distribute the nation's currency and coin to depository institutions, and serve as fiscal agents and depositories for the U.S. government and other entities.

The Federal Reserve serves as a catalyst for payment system improvements and conducts Reserve Bank oversight to ensure effective internal controls, operations, and management.

Payment Services to Depository and Other Institutions

Reserve Banks provide a range of payment and related services to depository and certain other institutions; these "priced services" include collecting checks, operating an automated clearinghouse (ACH) service, transferring funds and securities, and providing a multilateral settlement service.1

 

Commercial Check-Collection Service

The commercial check-collection service provides a suite of electronic and paper processing options for forward and return collections.

In 2019, the Reserve Banks recovered 104.0 percent of the total costs of their commercial check-collection service, including the related private-sector adjustment factor (PSAF). Revenue from operations totaled $128.1 million, resulting in net income of $6.3 million. The Reserve Banks' operating expenses and imputed costs totaled $121.9 million. Reserve Banks handled 4.4 billion checks in 2019, a decrease of 7.4 percent from 2018 (see table 1). The average daily value of checks collected by the Reserve Banks in 2019 was approximately $33.1 billion, a decrease of 2 percent from the previous year.

Table 1. Activity in Federal Reserve priced services, 2017–19

Thousands of items, except as noted

Service 2019 2018 2017 Percent change
2018–19 2017–18
Commercial check 4,389,011 4,739,534 5,152,521 -7.4 -8.0
Commercial ACH 15,583,792 14,691,615 13,749,249 6.1 6.9
Fedwire funds transfer 172,435 162,980 156,788 5.8 3.9
National settlement 502 521 517 -3.8 0.8
Fedwire securities 3,246 3,510 3,465 -7.5 1.3

Note: Activity in commercial check is the total number of commercial checks collected, including processed and fine-sort items; in commercial ACH, the total number of commercial items processed; in Fedwire funds transfer and securities transfer, the number of transactions originated online and offline; and in national settlement, the number of settlement entries processed.

Box 1. FedNow Service

The Federal Reserve announced on August 5, 2019, its plans to develop a nationwide faster payment settlement service, named the FedNow Service. The FedNow Service will help enable financial institutions to deliver end-to-end faster payment services to their customers, and users will be able to send and receive payments any time, any day, and have full access to those funds within seconds. See "Evolutions and Improvements to the System" for more information on the FedNow Service and other Federal Reserve efforts in 2019.

Commercial Automated Clearinghouse Service

The commercial ACH service provides domestic and cross-border batched payment options for same-day and next-day settlement.

In 2019, the Reserve Banks recovered 97.6 percent of the total costs of their commercial ACH services, including the related PSAF. Revenue from operations totaled $152.9 million, resulting in a net loss of $1.7 million. The Reserve Banks' operating expenses and imputed costs totaled $154.8 million. The Reserve Banks processed 15.6 billion commercial ACH transactions in 2019, an increase of 6.1 percent from 2018 (see table 1). The average daily value of FedACH transfers in 2019 was approximately $112 billion, an increase of 8.6 percent from the previous year.

Box 2. Cost Recovery Requirements

The Federal Reserve must (under the Monetary Control Act of 1980) establish fees for "priced services" to recover, over the long run, all the direct and indirect costs associated with its payment and settlement system service. Costs include those actually incurred as well as the imputed costs that would have been incurred—including financing costs, taxes, and certain other expenses—and the return on equity (profit) that would have been earned if a private business firm had provided the services.1 The imputed costs and imputed profit are collectively referred to as the private-sector adjustment factor (PSAF).

From 2010 through 2019, the Reserve Banks recovered 103.9 percent of the total priced services costs, including the PSAF (see table A). 1 In 2019, Reserve Banks recovered 99.4 percent of the total priced services costs, including the PSAF. 1 The Reserve Banks' operating expenses and imputed costs totaled $441.2 million. Revenue from operations totaled $444.0 million, resulting in net income from priced services of $2.9 million. The commercial check-collection service and the Fedwire Security Service achieved full cost recovery. The FedACH and Fedwire Funds and National Settlement Services, however, did not achieve full cost recovery, FedACH because of investment costs associated with the multiyear technology initiative to modernize its processing platform, and Fedwire Funds and National Settlement Services because of investment costs associated with initiatives to promote operational resiliency and message enhancements.

Table A. Priced services cost recovery, 2010–19

Millions of dollars, except as noted

Year Revenue from services1 Operating expenses and imputed costs2 Targeted return on equity 3 Total costs Cost recovery (percent) 4
2010 574.7 532.8 13.1 545.9 105.3
2011 478.6 444.4 16.8 461.2 103.8
2012 449.8 423.0 8.9 432.0 104.1
2013 441.3 409.3 4.2 413.5 106.7
2014 433.1 418.7 5.5 424.1 102.1
2015 429.1 397.8 5.6 403.4 106.4
2016 434.1 410.5 4.1 414.7 104.7
2017 441.6 419.4 4.6 424.0 104.1
2018 442.5 428.1 5.2 433.3 102.1
2019 444.0 441.2 5.4 446.5 99.4
2010–19 4,569.0 4,325.2 73.4 4,398.7 103.9

Note: Here and elsewhere in this section, components may not sum to totals or yield percentages shown because of rounding. Excludes amounts related to development of the FedNow Service.

 1. For the 10-year period, includes revenue from services of $4,558.6 million and other income and expense (net) of $10.4 million. Return to table

 2. For the 10-year period, includes operating expenses of $4,171.5 million, imputed costs of $49.0 million, and imputed income taxes of $104.8 million. Return to table

 3. From 2010 to 2012, the PSAF was adjusted to reflect the actual clearing balance levels maintained; previously, the PSAF had been calculated based on a projection of clearing balance levels. Return to table

 4. Revenue from services divided by total costs. For the 10-year period, cost recovery is 100.7 percent, including the effect of accumulated other comprehensive income (AOCI) reported by the priced services under ASC 715. For details on changes to the estimation of priced services AOCI and their effect on the pro forma financial statements, refer to note 3 to the "Pro Forma Financial Statements for Federal Reserve Priced Services" at the end of this section. Return to table

1. According to the Accounting Standards Codification (ASC) Topic 715 (ASC 715), Compensation-Retirement Benefits, the Reserve Banks recognized a $618.7 million reduction in equity related to the priced services' benefit plans through 2019. Including this reduction in equity, which represents a decline in economic value, results in cost recovery of 100.7 percent for the 10-year period. For details on how implementing ASC 715 affected the pro forma financial statements, refer to note 3 to the pro forma financial statements at the end of this section. Return to text

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Fedwire Funds and National Settlement Services

In 2019, the Reserve Banks recovered 97.3 percent of the costs of their Fedwire Funds and National Settlement Services, including the related PSAF. Revenue from operations totaled $135.5 million, resulting in a net loss of $2.1 million. The Reserve Banks' operating expenses and imputed costs totaled $137.7 million in 2019.

Fedwire Funds Service

The Fedwire Funds Service allows its participants to send or receive domestic time-critical payments using their balances at Reserve Banks to transfer funds in real time.

From 2018 to 2019, the number of Fedwire funds transfers originated by depository institutions increased 5.8 percent, to approximately 172.4 million (see table 1). The average daily value of Fedwire funds transfers in 2019 was $2.8 trillion, a decrease of 2.8 percent from the previous year.

National Settlement Service

The National Settlement Service is a multilateral settlement system that allows participants in private-sector clearing arrangements to settle transactions using their balances at Reserve Banks.

In 2019, the service processed settlement files for 12 local and national private-sector arrangements. The Reserve Banks processed 9,675 files that contained about 502,000 settlement entries for these arrangements in 2019 (see table 1). Settlement file activity in 2019 was roughly the same as in 2018, and settlement entries decreased 3.8 percent.

Fedwire Securities Service

The Fedwire Securities Service allows its participants to transfer electronically to other service participants certain securities issued by the U.S. Department of the Treasury, federal government agencies, government-sponsored enterprises, and certain international organizations.2

In 2019, the Reserve Banks recovered 100.3 percent of the costs of their Fedwire Securities Service, including the related PSAF. Revenue from operations totaled $27.1 million, resulting in a net income of $0.4 million. The Reserve Banks' operating expenses and imputed costs totaled $26.7 million in 2019. In 2019, the number of non-Treasury securities transfers processed via the service decreased 7.5 percent from 2018, to approximately 3.2 million (see table 1). The average daily value of Fedwire Securities transfers in 2019 was approximately $1.4 trillion, an increase of approximately 16.7 percent from the previous year.

FedLine Solutions: Access to Reserve Bank Services

The Reserve Banks' FedLine Solutions provide depository institutions with a variety of connections for accessing the Banks' payment and information services.

For priced services, the Reserve Banks charge fees for these connections and allocate the associated costs and revenue to the various services. There are currently six FedLine Solutions through which customers can access the Reserve Banks' priced services: FedMail, FedLine Exchange, FedLine Web, FedLine Advantage, FedLine Command, and FedLine Direct. These FedLine Solutions are designed to meet the individual connectivity, security, and contingency requirements of depository institution customers.

Between 2008 and 2019, Reserve Bank priced FedLine connections decreased nearly 25 percent, while the number of depository institutions in the United States declined 35 percent.

The Reserve Banks continue to focus on increased resiliency and availability of the FedLine Solutions. Additionally, the Reserve Banks are advancing the safety and security of the FedLine Solutions through key infrastructure upgrades, network modernization, proactive monitoring of an evolving threat environment, and strengthening of endpoint security policies.

Federal Reserve Intraday Credit

The Federal Reserve Board governs the use of Federal Reserve Bank intraday credit, also known as daylight overdrafts.3 A daylight overdraft occurs when an institution's account activity creates a negative balance in the institution's Federal Reserve account at any time in the operating day. Daylight overdrafts enable an institution to send payments more freely throughout the day than if it were limited strictly by its available intraday funds balance, increasing efficiency and reducing payment system risk.

Institutions currently hold historically high levels of overnight balances at the Federal Reserve Banks, while daylight overdrafts remained historically low, as shown in figure 1.4

Figure 1. Aggregate daylight overdrafts, 2007–19
Figure 1. Aggregate daylight overdrafts, 2007–19
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Fees collected for daylight overdrafts are also at historically low levels. In 2019, institutions paid about $111,428 in daylight overdraft fees; in contrast, fees totaled more than $50 million in 2008. The decrease in fees is largely attributable to the elevated level of reserve balances that began to accumulate in late 2008 and to the 2011 policy revision that eliminated fees for daylight overdrafts that are collateralized.

Currency and Coin

The Federal Reserve Board issues the nation's currency (in the form of Federal Reserve notes) to 28 Federal Reserve Bank offices. The Reserve Banks, in turn, distribute Federal Reserve notes to depository institutions in response to public demand. Together, the Board and Reserve Banks work to maintain the integrity of and confidence in Federal Reserve notes.

In 2019, the Board paid $795.9 million to the Treasury's Bureau of Engraving and Printing (BEP) for costs associated with the production of 5.7 billion Federal Reserve notes. The volume of Federal Reserve notes issued and outstanding at year-end 2019 totaled 44.9 billion pieces, a 3.5 percent increase from 2018. More than half of this growth was attributable to growth in demand for $100 notes, and an additional 27.3 percent was attributable to growth in demand for $1 and $20 notes. In 2019, the Reserve Banks distributed 35.4 billion Federal Reserve notes into circulation, a 3.7 percent decrease from 2018, and received 33.9 billion Federal Reserve notes from circulation, a 3.3 percent decrease from 2018.

The value of Federal Reserve notes issued and outstanding at year-end 2019 totaled $1,759.5 billion, a 5.3 percent increase from 2018. The year-over-year increase is attributable largely to increased demand for $100 notes. The Board estimates that at least one-half of the value of Federal Reserve notes in circulation is held abroad, mainly as a store of value.

The Reserve Banks also distribute coin to depository institutions on behalf of the U.S. Mint.5 In 2019, Reserve Banks distributed 68.3 billion coins into circulation, a 2.2 percent decrease from 2018, and received 56.1 billion coins from circulation, which is unchanged from 2018.

Fiscal Agency and Government Depository Services

The Federal Reserve Banks, upon the direction of the Secretary of the Treasury, act as fiscal agents of the U.S. government.6 The Reserve Banks, in their role as fiscal agents, provide services such as payment services, financing and securities services, and financial accounting and reporting services, as well as maintain the Treasury's operating cash account.

To support further the Treasury's mission, the Reserve Banks develop, operate, and maintain a number of automated systems and provide associated technology infrastructure services. The Reserve Banks also provide certain fiscal agency and depository services to other entities.

In 2019, Reserve Bank expenses for providing fiscal agency and depository services totaled $729.0 million, an increase of $23.0 million, or 3.3 percent (see table 2). The Treasury and other entities reimburse fully the Reserve Banks for the expense of providing fiscal agency and depository services. Support for Treasury programs accounted for 94.4 percent of expenses, and support for other entities accounted for the remaining 5.6 percent.

Table 2. Expenses of the Federal Reserve Banks for fiscal agency and depository services, 2017–19

Thousands of dollars1

Agency and service 2019 2018 2017
Department of the Treasury
Payment services 292,078 299,619 290,541
Financing and Treasury securities services 191,614 168,387 169,044
Fiscal accounting and reporting services 65,105 62,985 63,091
Technology infrastructure services2 139,703 135,660 137,720
Total, Treasury 688,500 666,651 660,396
Other entities 40,471 39,344 37,875
Total reimbursable expenses 728,971 705,995 698,271

 1. Service costs include reimbursable pension costs, where applicable. Previous versions of the Annual Report provided a separate line item for pension expenses. Return to table

 2. These costs include the development and support costs of Treasury technology infrastructure. Return to table

Payment Services

The Reserve Banks support the Treasury by developing, operating, and maintaining electronic systems that allow the public to receive payments from and authorize payments to federal agencies, as well as by providing operational and customer support.

The Reserve Banks process payments, such as federal payroll, Social Security benefits, and veterans' benefits, from the Treasury's account at the Federal Reserve and process payments made to the Treasury's account at the Federal Reserve, which include collections such as fees and debts owed to the federal government.

Reserve Bank expenses for payment services were $292.1 million in 2019, a decrease of $7.5 million, or 2.5 percent. The programs that contributed most to Reserve Bank expenses in 2019 were the Stored Value Card program, the Pay.gov program, and the U.S. Treasury Electronic Payment Solution Center, which are discussed in more detail below.

The Reserve Banks work with the Treasury to support the Stored Value Card program, which comprises three military cash-management services: EagleCash, EZPay, and Navy Cash. These programs provide electronic payment methods for goods and services on military bases and Navy ships. Stored Value Cards are in use on more than 80 military bases and installations in 19 countries (including the U.S.) and on board more than 135 ships. In 2019, the Reserve Banks continued to provide operations and customer support, replaced legacy equipment, and developed new functionality and capability for the Stored Value Card.

The Reserve Banks also work with the Treasury to expand electronic payment services to the Treasury's account at the Federal Reserve. The Reserve Banks operate and maintain Pay.gov, an application that allows the public to use the internet to initiate and authorize payments to the federal government using a U.S.-held bank account (through ACH Debit), a credit or debit card, or a digital wallet through services such as PayPal or Amazon Pay. In 2019, Pay.gov processed 221 million online payments valued at $212.0 billion. In addition, the Reserve Banks worked with the Treasury to support the movement of $85.0 billion in commercial deposits to the Treasury's account at the Federal Reserve and processed and settled 288 million electronic payment transactions valued at $695.0 billion. The Reserve Banks are also supporting the Treasury's efforts to modernize its electronic tax collection system.

Additionally, the Reserve Banks support the Treasury's efforts to expand electronic disbursements—which include Social Security, Supplemental Security Income, and veterans' payments—and federal government invoicing for goods and services. The Reserve Banks support the Treasury's initiatives aimed at eliminating paper check payments and increasing electronic payments to beneficiaries through the operation of the U.S. Treasury Electronic Payment Solution Center, which processes requests from the public to convert federal benefit payments, from paper check to electronic delivery. In 2019, the center completed its 10 millionth enrollment. The program, which started in 2005, has allowed the Treasury to achieve $1.2 billion in savings from administration and postal expenses. The Reserve Banks also work with the Treasury to support outreach, implementation, development, operations, and maintenance of the invoice processing platform, which accepts, processes, and presents transaction data between government agencies and vendor systems to facilitate electronic order-to-payment processing. In 2019, the invoice processing platform began a multiyear modernization initiative.

Financing and Securities Services

The Reserve Banks work closely with the Treasury in support of the financing needed to operate the federal government, which includes forecasting, scheduling, auctioning, issuing, settling, maintaining, and redeeming marketable Treasury securities (for example, bills, notes, and bonds). The Reserve Banks also support the Treasury's efforts to encourage savings by issuing, maintaining, and redeeming U.S. savings bonds, as well as providing fulfillment services. And the Reserve Banks provide customer service and operate the automated systems that support marketable Treasury securities and U.S. savings bonds.

Reserve Bank expenses for financing and securities services were $191.6 million in 2019, an increase of $23.2 million, or 13.8 percent, primarily attributable to development efforts to modernize the applications that support the issuance, maintenance, and redemption of marketable Treasury securities and U.S. savings bonds. Increased expenses also reflect a full year of operations support associated with the Treasury's introduction of the eight-week bill.

In 2019, the Reserve Banks, in partnership with the Treasury, conducted 325 auctions that resulted in the Treasury's awarding $11.7 trillion in wholesale Treasury marketable securities to investors and supported the issuance and servicing of $104.7 billion in savings and marketable securities, which are held in the TreasuryDirect system.

Accounting and Reporting Services

The Reserve Banks support the Treasury's accounting and reporting functions by forecasting, monitoring, and managing the government's overall cash requirements, cash flow, and government-wide accounting services. The Reserve Banks also support the Treasury's publication of the daily and monthly Treasury statements; the Combined Statement of Receipts, Outlays, and Balances of the United States Government; and the Financial Report of the United States Government.7

Reserve Bank expenses for financial accounting and reporting services were $65.1 million in 2019, an increase of $2.1 million, or 3.4 percent. The programs that contributed most to Reserve Bank expenses in 2019 were the Central Accounting Reporting System (CARS) and G-Invoicing, which are discussed in more detail below.

The Reserve Banks operate and maintain CARS, which handles accounting and reporting for all federal agencies and is the electronic system of record for the government's financial data. In 2019, the Treasury, with the support of the Reserve Banks and data from the CARS application and other sources, unveiled "Your Guide to America's Finances," which was developed to make the government's financial information accessible and presented in plain language with visualizations.8 The guide helps Americans understand the core financial concepts of revenue, spending, deficit, and debt and the part these concepts play in the overall financial picture of the United States. The Reserve Banks conducted market research, completed data analysis, developed the user interface, and helped develop a strategy to promote the guide to the public. In addition, the Reserve Banks operate and maintain the G-Invoicing application, which is a front-end application used by federal agencies to originate buy/sell intragovernmental transactions; manage the receipt and acceptance of general terms and conditions agreements, orders, and invoices; and initiate funds settlement. In 2019, the Reserve Banks worked with the Treasury to enhance the G-Invoicing application to improve the quality, usability, and auditability of federal government financial data.

Infrastructure and Technology Services

The Reserve Banks design, build, and maintain the technology infrastructure and environments that host the majority of applications that the Reserve Banks develop, operate, or maintain on behalf of the Treasury.

In 2019, the Reserve Banks continued to operate the infrastructure and modernize systems, increased automation, strengthened operational resiliency through enhanced technical failover capabilities, improved operational reporting and communications, and strengthened the Treasury's systems against ever-evolving cybersecurity threats.

Reserve Bank expenses for infrastructure and technology services were $139.7 million in 2019, an increase of $4.0 million, or 3.0 percent.

Services Provided to Other Entities

The Reserve Banks, when permitted by federal statute or when required by the Secretary of the Treasury, also provide other domestic and international entities with U.S.-dollar denominated banking services, which include funds, securities, and gold safekeeping; securities clearing, settlement, and investment; and correspondent banking.

The Reserve Banks also issue and maintain, in electronic form, many federal government agency, government-sponsored enterprise, and certain international organizations securities. The majority of securities services are performed for the Federal Home Loan Mortgage Association (Freddie Mac), the Federal National Mortgage Association (Fannie Mae), and the Government National Mortgage Association (Ginnie Mae).

Reserve Bank expenses for services provided to other entities were $40.5 million in 2019, an increase of $1.1 million, or 2.9 percent.

Evolutions and Improvements to the System

The Federal Reserve performs many functions in the payment system, including

  • payment system operator,
  • supervisor and regulator of financial institutions and systemically important financial market utilities (see box 3),
  • researcher, and
  • catalyst for system improvements.

 

Box 3. Payment System Regulatory Activity in 2019

Congress has assigned to the Board responsibility for implementing the Federal Reserve Act and certain other laws pertaining to a wide range of banking and financial activities, including those related to the payment and settlement system. The Board implements those laws in part through its regulations. See the Board's website at https://www.federalreserve.gov/supervisionreg/reglisting.htm.

  • Regulation CC (January 2019). The Board published a final rule that amends subpart C to address situations where there is a dispute as to whether a check has been altered or was issued with an unauthorized signature, and the original paper check is not available for inspection. https://www.govinfo.gov/content/pkg/FR-2018-12-10/html/2018-25746.htm
  • Regulation J (January 2019). The Board published final amendments that clarify and simplify certain provisions of Regulation J, remove obsolete provisions, and align the rights and obligations of sending banks, paying banks, and Federal Reserve Banks with the Board's recent amendments to Regulation CC to reflect the virtually all-electronic check collection and return environment. https://www.govinfo.gov/content/pkg/FR-2018-11-30/html/2018-25267.htm
  • Regulation CC (September 2019). The Board and the Consumer Financial Protection Bureau jointly issued regulations that implement a statutory requirement in the Electronic Funds Availability (EFA) Act to adjust the dollar amounts under the EFA Act for inflation. The agencies also amended Regulation CC to incorporate the Economic Growth, Regulatory Relief, and Consumer Protection Act amendments to the EFA Act, which include extending coverage to American Samoa, the Commonwealth of the Northern Mariana Islands, and Guam and making certain other technical amendments. https://www.govinfo.gov/content/pkg/FR-2019-07-03/html/2019-13668.htm

FedNow Service

The development of the FedNow Service will be a focus of the Federal Reserve for the foreseeable future. The Federal Reserve anticipates that the FedNow Service will be available sometime in 2023 or 2024. As the Federal Reserve finalizes the service implementation timeline, information for depository institutions will be available through existing Federal Reserve Bank communication channels.

The Federal Reserve announced its plans on August 5, 2019, to develop the FedNow Service, a new real-time gross settlement service, to support nationwide access to faster payments. The Federal Reserve's provision of the FedNow Service will provide core infrastructure to promote ubiquitous, safe, and efficient faster payments in the United States.

As part of the process for developing the FedNow Service, the Federal Reserve Board requested public comment on the service's desired features and functionality. The comment period, which closed on November 7, 2019, yielded approximately 182 comment letters from more than 353 industry stakeholders. Commenters represented a wide array of faster payments stakeholders, including banks of all sizes, core processors, trade organizations, consumer organizations, financial technology firms, and service providers, among others. The Federal Reserve is in the process of considering this industry feedback on the FedNow Service's features and functionality and plans to publish a Federal Register notice with a finalized the FedNow Service description.

Other Improvements and Efforts

The Reserve Banks have been engaged in a number of multiyear technology initiatives that will modernize their priced-services processing platforms. These investments are expected to enhance efficiency, the overall quality of operations, and the Reserve Banks' ability to offer additional services, consistent with the longstanding principles of fostering efficiency and safety, to depository institutions. The Reserve Banks continued to enhance the resiliency and information security posture of the Fedwire Funds, National Settlement Service, and Fedwire Securities Service through the Fedwire Resiliency Program, a multiyear initiative to respond to environmental threats and cyberthreats. The Reserve Banks are also developing and planning to implement a new FedACH-processing platform to improve the efficiency and reliability of their current FedACH operations.

During 2019, the Federal Reserve continued developmental work to replace the aging high-speed currency processing equipment and sensors at all Reserve Banks by 2026. Through a competitive process, the Federal Reserve selected two vendors to build prototype machines for delivery in 2020. Following the prototype assessments, the Reserve Banks will select one vendor to develop new production machines. In addition to new machine development, the Federal Reserve awarded a contract in 2019 and expects to award additional contracts in 2020 to replace sensors within the replacement high-speed currency processing equipment.

The improvement of the efficiency, effectiveness, and security of information technology (IT) services and operations continued to be a central focus of the Federal Reserve Banks. Led by the Federal Reserve's National IT organization, the 2019–2022 IT System IT Strategic Plan sets priorities, aligns IT direction and resources, and ensures IT leaders and team members are working towards a common set of goals. The goals of the plan are security, simplicity, and productivity with priorities in cybersecurity, cloud-enabled technologies, and end-user capabilities. National IT continues to guide the plan's implementation and track progress toward the goals.

The Reserve Banks remained vigilant about their cybersecurity posture, investing in risk-mitigation initiatives and programs and continuously monitoring and assessing cybersecurity risks to operations and protecting systems and data. The Federal Reserve implemented several cybersecurity initiatives that enhanced identity and access management capabilities; enhanced the ability to respond to evolving cybersecurity threats with agility, decisiveness, and speed by streamlining decisionmaking during a cybersecurity incident; and continued to improve continuous monitoring capabilities of critical assets.

Several Reserve Banks took action in 2019 to maintain and renovate their facilities. Major multiyear facility programs at several Reserve Bank offices continued, focused on updating obsolescent building systems to ensure infrastructure resiliency and continuity of operations. The Philadelphia Reserve Bank initiated construction activities for its multiyear program to replace its entire mechanical and electrical infrastructure. Other programs addressed the need to update office and operations areas in support of efficiency and working environment.

For more information on the acquisition costs and net book value of the Reserve Banks and Branches, see table 14 in Appendix G ("Statistical Tables") of this annual report.

Box 4. Payment System Research and Analysis

The Federal Reserve conducts research on a wide range of topics related to the design and activities of payment, clearing, and settlement (PCS) systems and financial market infrastructures, as well as the role of these systems in the commercial activities of consumers, businesses, and governments.

In 2019, topics examined in Federal Reserve research included the following:

  • measurement and analysis of long-run trends and short-run developments in the use of established payment methods 1
  • drivers and potential effects of innovations in the payment system, particularly those related to new and emerging technologies, such as digital currencies
  • design, oversight, and regulation of financial market infrastructures
  • developments related to payments fraud

For more information, see the Board's Payment Research website at https://www.federalreserve.gov/paymentsystems/payres_about.htm; see also Federal Reserve Bank Payments Groups at https://www.federalreserve.gov/paymentsystems/payres_fedgroups.htm.

1. In particular, see information about recent releases by the Federal Reserve Payments Study, available at https://www.federalreserve.gov/paymentsystems/fr-payments-study.htm. Return to text

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Oversight of Federal Reserve Banks

The combined financial statements of the Reserve Banks and the financial statements of each of the 12 Reserve Banks are audited annually by an independent public accounting firm retained by the Board of Governors.9 In addition, the Reserve Banks are subject to oversight by the Board of Governors, which performs its own reviews (see box 3).

The Reserve Banks use the 2013 framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) to assess their internal controls over financial reporting, including the safeguarding of assets. The management of each Reserve Bank annually provides an assertion letter to its board of directors that confirms adherence to COSO standards.

The Federal Reserve Board engaged KPMG LLP (KPMG) to audit the 2019 combined and individual financial statements of the Reserve Banks.10 In 2019, KPMG also conducted audits of the internal controls associated with financial reporting for each of the Reserve Banks. Fees for KPMG's services totaled $7.2 million. To ensure auditor independence, the Board requires that KPMG be independent in all matters relating to the audits. Specifically, KPMG may not perform services for the Reserve Banks or affiliates that would place it in a position of auditing its own work, making management decisions on behalf of the Reserve Banks, or in any other way impairing its audit independence. In 2019, the Reserve Banks did not engage KPMG for significant non-audit services.

The Board's reviews of the Reserve Banks include a wide range of oversight activities, conducted primarily by its Division of Reserve Bank Operations and Payment Systems. Division personnel monitor, on an ongoing basis, the activities of each Reserve Bank, National IT, and the System's Office of Employee Benefits (OEB). The oversight program identifies the most strategically important Reserve Bank current and emerging risks and defines specific approaches to achieve a comprehensive evaluation of the Reserve Banks' controls, operations, and management effectiveness.

The comprehensive reviews include an assessment of the internal audit function's effectiveness and its conformance to the Institute of Internal Auditors' (IIA) International Standards for the Professional Practice of Internal Auditing, applicable policies and guidance, and the IIA's code of ethics.

The Board also reviews System Open Market Account (SOMA) and foreign currency holdings annually to

  • determine whether the New York Reserve Bank, while conducting the related transactions and associated controls, complies with the policies established by the Federal Open Market Committee (FOMC); and
  • assess SOMA-related IT project management and application development, vendor management, and system resiliency and contingency plans.

 

In addition, KPMG audits the year-end schedule of SOMA participated asset and liability accounts and the related schedule of participated income accounts. The FOMC is provided with the external audit reports and a report on the Board review.

Income and Expenses

Annually, the Board releases the Combined Reserve Banks financial statements with financial information as of December 31 and includes the accounts and results of operations of each of the 12 Reserve Banks.

In 2019, income was $103.2 billion, compared with $112.7 billion in 2018; expenses totaled $47.7 billion, compared with $49.4 billion in 2018; and net income before remittances to Treasury totaled $55.5 billion in 2019, compared with $63.1 billion in 2018.

Table 3 summarizes the income, expenses, and distributions of net earnings of the Reserve Banks for 2019 and 2018. Appendix G of this report, "Statistical Tables," provides more detailed information on the Reserve Banks.11 Additionally, appendix G summarizes the Reserve Banks' 2019 budget performance and 2020 budgets, budgeting processes, and trends in expenses and employment.

SOMA Holdings

The FOMC has authorized and directed the Federal Reserve Bank of New York execute open market transactions to the extent necessary to carry out the domestic policy directive adopted by the FOMC. The Federal Reserve Bank of New York, on behalf of the Reserve Banks, holds in the SOMA the resulting securities, which include U.S. Treasuries, federal agency and government-sponsored enterprise debt securities, federal agency and government-sponsored enterprise mortgage-backed securities, investments denominated in foreign currencies, and commitments to buy or sell related securities.

Table 4 summarizes the average daily assets (liabilities), current income (expenses), and average interest rate of SOMA holdings for 2019 and 2018.

Table 3. Income, expenses, and distribution of net earnings of the Federal Reserve Banks, 2019 and 2018

Millions of dollars

Item 2019 2018
Current income 103,220 112,727
Loan interest income 1 3
SOMA interest income 102,737 112,257
Other current income1 482 4672
Net expenses 45,423 47,329
Operating expenses 4,690 4,409 2
Reimbursements -729 -706
System pension service cost 510 577 2
Interest paid on depository institutions deposits and others 34,939 38,486
Interest expense on securities sold under agreements to repurchase 6,012 4,559
Other expenses 1 4
Current net income 57,797 65,398
Net (deductions from) additions to current net income -169 -273
Treasury securities gains, net 0 5
Federal agency and government-sponsored enterprise mortgage-backed securities (losses) gains, net 9 -3
Foreign currency translation losses, net -168 -390
Other deductions or additions -10 115 2
Assessments by the Board of Governors3 2,170 2,024
For Board expenditures 814 838
For currency costs 837 849
For Consumer Financial Protection Bureau costs 4 519 337
Net income before providing for remittances to the Treasury 55,458 63,101
Earnings remittances to the Treasury 54,893 65,319
Net income after providing for remittances to the Treasury 565 -2,218
Other comprehensive gain 149 42
Comprehensive (loss) income 714 -2,176
Total distribution of net income 55,607 63,143
Dividends on capital stock 714 999
Transfer to surplus and change in accumulated other comprehensive income 0 -3,175
Earnings remittances to the Treasury5 54,893 65,319

 1. Includes income from priced services and securities lending fees. Return to table

 2. Income and expenses from 2018 have been reclassified in accordance with accounting standard updates. Return to table

 3. A detailed account of the assessments and expenditures of the Board of Governors appears in the Board of Governors Financial Statements (see https://www.federalreserve.gov/aboutthefed/audited-annual-financial-statements.htm). Return to table

 4. The Board of Governors assesses the Reserve Banks to fund the operations of the Consumer Financial Protection Bureau. Return to table

 5. Earnings remittances to the Treasury in 2018 included two lump sum payments totaling a $3.175 billion as required by the Bipartisan Budget Act of 2018 and the Economic Growth, Regulatory Relief, and Consumer Protection Act. Return to table

Table 4. System Open Market Account (SOMA) holdings and Loans of the Federal Reserve Banks, 2019 and 2018

Millions of dollars, except as noted

Item Average daily assets (+)/liabilities (–) Current income (+)/expense (–) Average interest rate (percent)
2019 2018 Year-over-year change 2019 2018 Year-over-year change 2019 2018
SOMA Holdings
Securities purchased under agreements to resell 56,971 * 256 971 * 971 1.70 n/a
U.S. Treasury securities 1 2,233,384 2,442,075 -208,691 58,532 62,807 -4,275 2.62 2.57
Government-sponsored enterprise debt (GSE) securities 1 2,682 3,638 -956 137 175 -38 5.10 4.81
Federal agency and GSE mortgage-backed securities 2 1,574,798 1,769,026 -194,228 43,124 49,289 -6,165 2.74 2.79
Foreign currency denominated investments 3 20,744 21,335 -591 -33 -29 -4 -0.16 -0.14
Central bank liquidity swaps4 273 677 -404 6 15 -9 2.43 2.23
Other SOMA assets5 4 7 -3 * * * 1.85 1.50
Total SOMA assets 3,888,856 4,236,758 -347,902 102,737 112,257 -9,520 2.64 2.65
Securities sold under agreements to repurchase: primary dealers and expanded counterparties -4,981 -12,552 7,571 -102 -186 84 2.04 1.48
Securities sold under agreements to repurchase: foreign official and international accounts -269,399 -236,818 -32,581 -5,910 -4,373 -1,537 2.19 1.85
Total securities sold under agreements to repurchase -274,380 -249,370 -25,010 -6,012 -4,559 -1,453 2.19 1.83
Other SOMA liabilities6 -97 -302 205 n/a n/a n/a n/a n/a
Total SOMA liabilities -274,477 -249,672 -24,805 -6,012 -4,559 -1,453 2.19 1.83
Total SOMA holdings 3,614,379 3,987,086 -372,707 96,726 107,698 -10,972 2.68 2.70

 1. Face value, net of unamortized premiums and discounts. Return to table

 2. Face value, which is the remaining principal balance of the securities, net of unamortized premiums and discounts. Does not include unsettled transactions. Return to table

 3. Foreign currency denominated assets are revalued daily at market exchange rates. Return to table

 4. Dollar value of foreign currency held under these agreements valued at the exchange rate to be used when the foreign currency is returned to the foreign central bank. This exchange rate equals the market exchange rate used when the foreign currency was acquired from the foreign central bank. Return to table

 5. Cash and short-term investments related to the federal agency and government-sponsored enterprise mortgage-backed securities (GSE MBS) portfolio. Return to table

 6. Represents the obligation to return cash margin posted by counterparties as collateral under commitments to purchase and sell federal agency and GSE MBS, as well as obligations that arise from the failure of a seller to deliver securities on the settlement date. Return to table

* Less than $500,000.

n/a Not applicable.

Pro Forma Financial Statements for Federal Reserve Priced Services

Table 5. Pro forma balance sheet for Federal Reserve priced services, December 31, 2019 and 2018

Millions of dollars

Item 2019 2018
Short-term assets (note 1)
Imputed investments 656.2   770.1  
Receivables 39.3   38.2  
Materials and supplies 0.6   0.6  
Prepaid expenses 12.2   14.4  
Items in process of collection 80.7   236.2  
Total short-term assets   789.0   1,059.5
Long-term assets (note 2)
Premises 111.5   113.0  
Furniture and equipment 32.7   37.0  
Leases, leasehold improvements, and long-term prepayments 91.6   103.8  
Deferred tax asset 176.1   183.3  
Total long-term assets   411.9   437.1
Total assets   1,200.9   1,496.6
Short-term liabilities (note 3)
Deferred-availability items 736.9   1,006.2  
Short-term debt 27.4   27.6  
Short-term payables 24.7   25.7  
Total short-term liabilities   789.0   1,059.5
Long-term liabilities (note 3)
Long-term debt 10.1   19.1 r  
Accrued benefit costs 341.8   343.2 r  
Total long-term liabilities   351.9   362.3
Total liabilities   1,140.9   1,421.8
Equity (including accumulated other comprehensive loss of $618.7 million and $624.1 million at December 31, 2019 and 2018, respectively)   60.0   74.8
Total liabilities and equity (note 3)   1,200.9   1,496.6

Note: Components may not sum to totals because of rounding. The accompanying notes are an integral part of these pro forma priced services financial statements.

r Revised

Table 6. Pro forma income statement for Federal Reserve priced services, 2019 and 2018

Millions of dollars

Item 2019 2018
Revenue from services provided to depository institutions (note 4)   443.6   442.5
Operating expenses (note 5)   440.7   421.6
Income from operations   2.9   20.9
Imputed costs (note 6)        
Interest on debt 0.3   3.1  
Interest on float -4.8   -4.7  
Sales taxes 4.2 -0.3 3.8 2.3
Income from operations after imputed costs   3.2   18.7
Other income and expenses (note 7)        
Investment income 0.5   0.0  
Income before income taxes   3.7   18.7
Imputed income taxes (note 6)   0.8   4.2
Net income   2.9   14.4
Memo: Targeted return on equity (note 6)   5.4   5.2

Note: Components may not sum to totals because of rounding. The accompanying notes are an integral part of these pro forma priced services financial statements.

Table 7. Pro forma income statement for Federal Reserve priced services, by service, 2019

Millions of dollars

Item Total Commercial check collection Commercial ACH Fedwire funds Fedwire securities
Revenue from services (note 4) 443.6 128.1 152.9 135.5 27.1
Operating expenses (note 5) 1 440.7 118.6 158.8 136.9 26.3
Income from operations 2.9 9.5 (5.9) (1.5) 0.7
Imputed costs (note 6) (0.3) 1.5 (3.5) 1.4 0.3
Income from operations after imputed costs 3.2 8.0 (2.4) (2.9) 0.5
Other income and expenses, net (note 7) 0.5 0.1 0.2 0.1 0.0
Income before income taxes 3.7 8.1 (2.2) (2.7) 0.5
Imputed income taxes (note 6) 0.8 1.8 (0.5) (0.6) 0.1
Net income 2.9 6.3 (1.7) (2.1) 0.4
Memo: Targeted return on equity (note 6) 5.4 1.4 2.0 1.6 0.3
Cost recovery (percent) (note 8) 99.4% 104.0% 97.6% 97.3% 100.3%

Note: Components may not sum to totals because of rounding. Excludes amounts related to development of the FedNow Service. The accompanying notes are an integral part of these pro forma priced services financial statements.

 1. Operating expenses include pension costs, Board expenses, and reimbursements for certain nonpriced services. Return to table

Notes to Pro Forma Financial Statements for Priced Services

(1) Short-Term Assets

Receivables are composed of fees due the Reserve Banks for providing priced services and the share of suspense- and difference-account balances related to priced services.

Items in process of collection are gross Federal Reserve cash items in process of collection (CIPC), stated on a basis comparable to that of a commercial bank. They reflect adjustments for intra-Reserve Bank items that would otherwise be double-counted on the combined Federal Reserve balance sheet and adjustments for items associated with nonpriced items (such as those collected for government agencies). Among the costs to be recovered under the Monetary Control Act is the cost of float, or net CIPC during the period (the difference between gross CIPC and deferred-availability items, which is the portion of gross CIPC that involves a financing cost), valued at the federal funds rate. Investments of excess financing derived from credit float are assumed to be invested in federal funds.

(2) Long-Term Assets

Long-term assets consist of long-term assets used solely in priced services and the priced-service portion of long-term assets shared with nonpriced services, including a deferred tax asset related to the priced services pension and postretirement benefits obligation. The tax rate associated with the deferred tax asset was 22.2 percent for 2019 and 22.7 percent for 2018.

Long-term assets also consist of an estimate of the assets of the Board of Governors used in the development of priced services.

(3) Liabilities and Equity

Under the matched-book capital structure for assets, short-term assets are financed with short-term payables and imputed short-term debt, if needed. Long-term assets are financed with long-term liabilities, imputed long-term debt, and imputed equity, if needed. To meet the Federal Deposit Insurance Corporation (FDIC) requirements for a well-capitalized institution, in 2019 equity is imputed at 5.0 percent of total assets and 10.4 percent of risk-weighted assets, and 2018 equity is imputed at 5.0 percent of total assets and 11.3 percent of risk-weighted assets.

The Board's Payment System Risk policy reflects the international standards for financial market infrastructures developed by the Committee on Payment and Settlement Systems and the Technical Committee of the International Organization of Securities Commissions in the Principles for Financial Market Infrastructures. The policy outlines the expectation that the Fedwire Services will meet or exceed the applicable risk-management standards. Although the Fedwire Funds Service does not face the risk that a business shock would cause the service to wind down in a disorderly manner and disrupt the stability of the financial system, in order to foster competition with private-sector financial market infrastructures, the Reserve Banks' priced services will hold six months of the Fedwire Funds Service's current operating expenses as liquid net financial assets and equity on the pro forma balance sheet and, if necessary, impute additional assets and equity to meet the requirement. The imputed assets held as liquid net financial assets are cash items in process of collection, which are assumed to be invested in federal funds. In 2019 and 2018, there was sufficient assets and equity such that additional imputed balances were not required.

In accordance with ASC 715, Compensation–Retirement Benefits, the Reserve Banks record the funded status of pension and other benefit plans on their balance sheets. To reflect the funded status of their benefit plans, the Reserve Banks recognize the deferred items related to these plans, which include prior service costs and actuarial gains or losses, on the balance sheet. This results in an adjustment to the pension and other benefit plan liabilities related to priced services and the recognition of an associated deferred tax asset with an offsetting adjustment, net of tax, to accumulated other comprehensive income (AOCI), which is included in equity. The Reserve Bank priced services recognized a pension asset, which is a component of accrued benefit costs, of $17.0 million in 2019 and a pension asset of $18.8 million in 2018.12 The change in the funded status of the pension and other benefit plans resulted in a corresponding decrease in accumulated other comprehensive loss of $9.4 million in 2019.

(4) Revenue

Revenue represents fees charged to depository institutions for priced services and is realized from each institution through direct charges to an institution's account.

(5) Operating Expenses

Operating expenses consist of the direct, indirect, and other general administrative expenses of the Reserve Banks for priced services (that is, Check, ACH, FedWire Funds, and FedWire Securities) and the expenses of the Board related to the development of priced services. Board expenses were $7.0 million in 2019 and $5.1 million in 2018. Operating expenses exclude amounts related to the development of the FedNow Service.

In accordance with ASC 715, the Reserve Bank priced services recognized qualified pension-plan operating expenses of $28.8 million in 2019 and $26.5 million in 2018. Operating expenses also include the nonqualified net pension expense of $9.9 million in 2019 and $5.0 million in 2018. The 2019 pension expense increase reflects the impact of adopting an update to ASC 715 requiring disaggregation of other components of net benefit expense from service costs. Reserve Banks prospectively adopted this accounting change in 2019. If other components of net benefit cost had been disaggregated from service costs during 2018, qualified pension-plan operating expenses would have increased $8.4 million to $34.8 million. ASC 715 does not change the systematic approach required by generally accepted accounting principles to recognize the expenses associated with the Reserve Banks' benefit plans in the income statement. As a result, these expenses do not include amounts related to changes in the funded status of the Reserve Banks' benefit plans, which are reflected in AOCI.

The income statement by service reflects revenue, operating expenses, imputed costs, other income and expenses, and cost recovery. The tax rate associated with imputed taxes was 22.2 percent for 2019 and 22.7 percent for 2018.

(6) Imputed Costs

Imputed costs consist of income taxes, return on equity, interest on debt, sales taxes, and interest on float. Many imputed costs are derived from the PSAF model. The 2019 cost of short-term debt imputed in the PSAF model is based on nonfinancial commercial paper rates; the cost of imputed long-term debt is based on Merrill Lynch Corporate and High Yield Index returns; and the effective tax rate is derived from U.S. publicly traded firm data, which serve as the proxy for the financial data of a representative private-sector firm. The after-tax rate of return on equity is based on the returns of the equity market as a whole.13

Interest is imputed on the debt assumed necessary to finance priced-service assets. These imputed costs are allocated among priced services according to the ratio of operating expenses, less shipping expenses, for each service to the total expenses, less the total shipping expenses, for all services.

Interest on float is derived from the value of float to be recovered for the check and ACH services, Fedwire Funds Service, and Fedwire Securities Services through per-item fees during the period. Float income or cost is based on the actual float incurred for each priced service.

The following shows the daily average recovery of actual credit float by the Reserve Banks for 2019 and 2018, in millions of dollars:14

  2019 2018
Total float -225.3 -254.6
Float not related to priced services1 -9.7 -0.1
Float subject to recovery through per-item fees -215.6 -254.5

 1. Float not related to priced services includes float generated by services to government agencies and by other central bank services. Return to table

Float that is created by account adjustments due to transaction errors and the observance of nonstandard holidays by some depository institutions was recovered from the depository institutions through charging institutions directly. Float subject to recovery is valued at the federal funds rate. Certain ACH funding requirements and check products generate credit float; this float has been subtracted from the cost base subject to recovery in 2019 and 2018.

(7) Other Income and Expenses

Other income consists of income on imputed investments. Excess financing resulting from additional equity imputed to meet the FDIC well-capitalized requirements is assumed to be invested and earning interest at the 3-month Treasury bill rate.

(8) Cost Recovery

Annual cost recovery is the ratio of revenue, including other income, to the sum of operating expenses, imputed costs, imputed income taxes, and after-tax targeted return on equity.

Footnotes

 1. Depository institutions are defined as commercial banks, thrifts, and credit unions. Besides playing an important role in the broader economy by providing transaction accounts, such as checking accounts, to consumers, households, and businesses, these institutions play an important role in the Federal Reserve System's payment and settlement system function.
The ACH enables depository institutions and their customers to process large volumes of payments through electronic batch processes. Return to text

 2. The expenses, revenues, volumes, and fees reported here are for transfers of securities issued by federal government agencies, government-sponsored enterprises, and certain international organizations. Reserve Banks provide Treasury securities services in their role as Treasury's fiscal agent. These services are not considered priced services. For details, see "Financing and Securities Services" later in this section. Return to text

 3. See Payment System Risk policy, https://www.federalreserve.gov/paymentsystems/psr_about.htm. The Payment System Risk policy recognizes explicitly the role of the central bank in providing intraday balances and credit to healthy institutions; under the policy, the Reserve Banks provide collateralized intraday credit at no cost. Return to text

 4. Before the 2007–09 financial crisis, overnight balances were much lower and daylight overdrafts significantly higher than levels observed since late 2008. The use of daylight overdrafts spiked amid the market turmoil near the end of 2008 but dropped sharply as various liquidity programs initiated by the Federal Reserve, all since terminated, took effect. During this period, the Federal Reserve also began paying interest on balances held at the Reserve Banks, increased its lending under the Term Auction Facility, and began purchasing government-sponsored enterprise mortgage-backed securities. These measures tended to increase balances institutions held at the Banks, which decreased the demand for intraday credit. In 2007, for example, institutions held, on average, less than $20 billion in overnight balances, and total average daylight overdrafts were around $60 billion. Return to text

 5. The Federal Reserve Board is the issuing authority for Federal Reserve notes, while the U.S. Mint, a bureau of the U.S. Treasury, is the issuing authority for coin. Return to text

 6. In accordance with section 15 of the Federal Reserve Act. See https://www.federalreserve.gov/aboutthefed/section15.htmReturn to text

 7. The Daily Treasury Statement summarizes the U.S. Treasury's cash and debt operations for the federal government on a modified cash basis and can be accessed at https://fiscal.treasury.gov/reports-statements/dts/. The Monthly Treasury Statement summarizes the financial activities of the federal government and off-budget federal entities and can be accessed at https://www.fiscal.treasury.gov/reports-statements/mts/. The Combined Statement of Receipts, Outlays, and Balances of the United States Government is recognized as the official publication of the government's receipts and outlays and can be accessed at https://fiscal.treasury.gov/reports-statements/combined-statement/. The Financial Report of the United States Government provides the President, Congress, and the American people with a comprehensive view of the federal government's finances and can be accessed at https://fiscal.treasury.gov/reports-statements/financial-report/Return to text

 8. "Your Guide to America's Finances" can be accessed at https://datalab.usaspending.gov/americas-finance-guide/index.htmlReturn to text

 9. See "Federal Reserve Banks Combined Financial Statements" at https://www.federalreserve.gov/aboutthefed/audited-annual-financial-statements.htmReturn to text

 10. In addition, KPMG audited the Office of Employee Benefits of the Federal Reserve System (OEB), the Retirement Plan for Employees of the Federal Reserve System (System Plan), and the Thrift Plan for Employees of the Federal Reserve System (Thrift Plan). The System Plan and the Thrift Plan provide retirement benefits to employees of the Board, the Federal Reserve Banks, the OEB, and the Consumer Financial Protection Bureau. Return to text

 11. Table 9A is a statement of condition for each Reserve Bank; table 10 details the income and expenses of each Reserve Bank for 2019; table 11 shows a condensed statement for each Reserve Bank for the years 1914 through 2019; and table 13 gives the number and annual salaries of officers and employees for each Reserve Bank. Return to text

 12. The prior year pension asset was restated from $19.1 million to $18.8 million because of revisions to the calculation methodology. Return to text

 13. See Federal Reserve Bank Services Private-Sector Adjustment Factor, 77 Fed. Reg. 67,007 (November 8, 2012), https://www.gpo.gov/fdsys/pkg/FR-2012-11-08/pdf/2012-26918.pdf, for details regarding the PSAF methodology change. Return to text

 14. Credit float occurs when the Reserve Banks debit the paying bank for checks and other items prior to providing credit to the depositing bank. Return to text

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Last Update: July 28, 2020