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Federal funds

• Non-interest bearing deposits held in reserve for depository institutions at their district Federal Reserve Bank. Also, excess reserves lent by banks to each other.

• Loan transactions between commercial banks in which the Federal Reserve banks become involved.

• (1) Non-interest-bearing deposits held by member banks at the Federal Reserve. (2) Used to denote "immediately available" funds in the clearing sense.

 
 

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 Embedded terms in definition
 Clearing
Commercial
Excess reserves
Held
Member
Reserve
 
 Related Terms
 

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