Title 12 — Banks and BankingRelease 119-73
§355 Purchase and sale of obligations of National, State, and municipal governments; open market operations; purchases and sales from or to United States; maximum aggregate amount of obligations acquired directly from or loaned directly to United States
Title 12 › Chapter CHAPTER 3— - FEDERAL RESERVE SYSTEM › Subchapter SUBCHAPTER IX— - POWERS AND DUTIES OF FEDERAL RESERVE BANKS › § 355
Summary
Each Federal Reserve Bank can buy and sell certain government and public debts at home or abroad. They may trade U.S. Treasury bonds and notes and other short-term securities that mature in not more than six months. That includes bills, notes, revenue bonds, and warrants issued by states, counties, cities, and special districts (like irrigation, drainage, and reclamation districts) to pay for expected taxes or assured revenues. They may also buy debts of, or fully guaranteed by, a foreign government. Purchases of nonfederal debt must follow rules set by the Board of Governors. Direct U.S. obligations or those fully guaranteed by the United States can be bought and sold in the open market with no maturity limit. Under the Federal Open Market Committee’s direction and rules, Reserve Banks may also buy and sell in the open market any debt that is a direct obligation of, or fully guaranteed by, a U.S. agency.
Full Legal Text
Title 12, §355
Banks and Banking — Source: USLM XML via OLRC
Every Federal Reserve bank shall have power:
(1)To buy and sell, at home or abroad, bonds and notes of the United States, bonds issued under the provisions of subsection (c) of section 1463 11 See References in Text note below. of this title and having maturities from date of purchase of not exceeding six months, and bills, notes, revenue bonds, and warrants with a maturity from date of purchase of not exceeding six months, issued in anticipation of the collection of taxes or in anticipation of the receipt of assured revenues by any State, county, district, political subdivision, or municipality in the continental United States, including irrigation, drainage and reclamation districts, and obligations of, or fully guaranteed as to principal and interest by, a foreign government or agency thereof, such purchases to be made in accordance with rules and regulations prescribed by the Board of Governors of the Federal Reserve System. Notwithstanding any other provision of this chapter, any bonds, notes, or other obligations which are direct obligations of the United States or which are fully guaranteed by the United States as to principal and interest may be bought and sold without regard to maturities but only in the open market.
(2)To buy and sell in the open market, under the direction and regulations of the Federal Open Market Committee, any obligation which is a direct obligation of, or fully guaranteed as to principal and interest by, any agency of the United States.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
References in Text
section 1463 of this title, referred to in par. (1), was repealed by Pub. L. 89–554, § 8(a), Sept. 6, 1966, 80 Stat. 648. This chapter, referred to in par. (1), was in the original “this Act”, meaning act Dec. 23, 1913, ch. 6, 38 Stat. 251, known as the Federal Reserve Act. For complete classification of this Act to the Code, see
References in Text
note set out under section 226 of this title and Tables. Codification Section is comprised of subsec. (b) of section 14 of act Dec. 23, 1913. For classification to this title of remainder of section 14, see Codification note set out under section 353 of this title.
Amendments
1980—Par. (1). Pub. L. 96–221 inserted provisions relating to obligations of a foreign government or agency thereof. 1979—Par. (1). Pub. L. 96–18, § 1(a), struck out proviso under which Federal Reserve banks had been allowed, until May 1, 1979, to buy and sell either in the open market or directly from or to the United States bonds, notes, or other obligations which were direct obligations of the United States or which were fully guaranteed by the United States and, after Apr. 30, 1979, had allowed such obligations to be purchased but only in the open market. Pub. L. 96–18, § 3(b), inserted provision that notwithstanding any other provision of this chapter, any bonds, notes, or other obligations which are direct obligations of the United States or which are fully guaranteed by the United States as to principal and interest may be bought and sold without regard to maturities but only in the open market. Par. (2). Pub. L. 96–18, §§ 1(b), 3(a), temporarily substituted “the United States or any agency of the United States, and to lend, under the direction and
Regulations
of the Federal Open Market Committee, any such obligation to the Secretary of the Treasury” for “any agency of the United States”. See Effective and Termination Dates of 1979 Amendment note set out below. Pars. (3), (4). Pub. L. 96–18, §§ 1(c), 3(a), temporarily added pars. (3) and (4). See Effective and Termination Dates of 1979 Amendment note set out below. 1978—Par. (1). Pub. L. 95–534 substituted “
May 1, 1979” for “
May 1, 1978” and “
April 30, 1979” for “
April 30, 1978”. 1977—Par. (1). Pub. L. 95–154 substituted “
May 1, 1978” for “
October 1, 1977” and “
April 30, 1978” for “
September 30, 1977”. Pub. L. 95–128 substituted “
October 1, 1977” for “
November 1, 1978” and “
September 30, 1977” for “
October 31, 1978”. Pub. L. 95–22 substituted “
November 1, 1978” for “
November 1, 1976” and “
October 31, 1978” for “
October 31, 1976”. 1975—Par. (1). Pub. L. 94–125 substituted “
November 1, 1976” for “
November 1, 1975” and “
October 31, 1976” for “
October 31, 1975”. 1974—Par. (1). Pub. L. 93–495 substituted “
November 1, 1975 for “
November 1, 1973” and “
October 31, 1975” for “
October 31, 1973”. 1973—Par. (1). Pub. L. 93–93 substituted “
November 1, 1973” for “
July 1, 1973” and “
October 31, 1973” for “
June 30, 1973”. 1971—Par. (1). Pub. L. 92–45 substituted “
July 1, 1973” for “
July 1, 1971” and “
June 30, 1973” for “
June 30, 1971”. 1970—Par. (1). Pub. L. 91–360 substituted “
July 1, 1971” for “
July 1, 1970” and “
June 30, 1971” for “
June 30, 1970”. 1968—Par. (1). Pub. L. 90–300 substituted “
July 1, 1970” for “
July 1, 1968” and “
June 30, 1970” for “
June 30, 1968”. 1966—Pub. L. 89–597 designated existing provisions as par. (1) and added par. (2). Pub. L. 89–484 substituted “
July 1, 1968” for “
July 1, 1966” and “
June 30, 1968” for “
June 30, 1966”. 1964—Pub. L. 88–344 substituted “
July 1, 1966” for “
July 1, 1964”, and “
June 30, 1966” for “
June 30, 1964”. 1962—Pub. L. 87–506 substituted “
July 1, 1964” for “
July 1, 1962” and “
June 30, 1964” for “
June 30, 1962.” 1961—Pub. L. 87–353 struck out provision authorizing every Federal reserve bank to buy and sell, at home or abroad, bonds of the Federal Farm Mortgage Corporation having maturities from date of purchase of not exceeding six months. 1960—Pub. L. 86–567 substituted “
July 1, 1962” for “
July 1, 1960” and “
June 30, 1962” for “
June 30, 1960”. 1958—Pub. L. 85–476 substituted “
July 1, 1960” for “
July 1, 1958” and “
June 30, 1960” for “
June 30, 1958”. 1956—Act
June 25, 1956, substituted “
July 1, 1958” for “
July 1, 1956” and “
June 30, 1958” for “
June 30, 1958”. 1954—Act
June 29, 1954, substituted “
July 1, 1956” for “
July 1, 1954” and “
June 30, 1956” for “
June 30, 1954”. 1952—Act
June 23, 1952, substituted “
July 1, 1954” for “
July 1, 1952” and “
June 30, 1954” for “
June 30, 1952”. 1950—Act
June 30, 1950, substituted “
July 1, 1952” for “
July 1, 1950” and “
June 30, 1952” for “
June 30, 1950”. 1947—Act Apr. 28, 1947, substituted proviso which allows the Federal Reserve banks to buy and sell either in the open market or directly from or to the United States any bonds, notes, or other obligations which are direct obligations of the United States or are fully guaranteed by the United States but limits the aggregate amount to be held at any one time to $5,000,000,000, and after
June 30, 1950 allows such obligation to be purchased, but only in the open market for former proviso. 1942—Act Mar. 27, 1942, amended proviso generally. 1935—Act Aug. 23, 1935, § 206(a), inserted proviso. 1934—Act Apr. 27, 1934, authorized purchase and sale of bonds issued under subsec. (c) of [former] section 1463 of this title. Act Jan. 31, 1934, authorized purchase and sale of bonds of Federal Farm Mortgage Corporation.
Statutory Notes and Related Subsidiaries
Change of Name
section 203(a) of act Aug. 23, 1935, changed name of Federal Reserve Board to Board of Governors of the Federal Reserve System.
Effective Date
and Applicability of 1980 AmendmentAmendment by Pub. L. 96–221 effective on first day of sixth month which begins after Mar. 31, 1980, see section 108 of Pub. L. 96–221, set out as an
Effective Date
of 1980 Amendment note under section 248 of this title. Pub. L. 96–221, title I, § 105(b)(2), Mar. 31, 1980, 94 Stat. 140, provided that the amendment made by section 105(b)(2) of Pub. L. 96–221 is applicable to 12 U.S.C. 355(1) as such section is in effect on the first day of the sixth month which begins after
March 31, 1980, and as it will be in effect on
June 1, 1981. Effective and Termination Dates of 1979 Amendment Pub. L. 96–18, § 3(a),
June 8, 1979, 93 Stat. 36, provided that: “Except for the
Amendments
made by subsection (a) of the first section of this Act [amending par. (1) of this section], and except for the amendment made by subsection (b) of this section [amending par. (1) of this section effective upon the expiration of the two-year period beginning on June 8, 1979], the
Amendments
made by this Act [enacting section 359a of this title and pars. (3) and (4) of this section and amending par. (2) of this section] shall be effective only during the two-year period which begins on the date of enactment of this Act [
June 8, 1979]. Upon the expiration of such period, each provision of law amended by this Act [enacting section 359a of this title and amending this section], except section 14(b)(1) of the Federal Reserve Act [par. (1) of this section], is amended to read as it did immediately prior to the enactment of this Act.” Pub. L. 96–18, § 3(b),
June 8, 1979, 93 Stat. 36, provided that the amendment made by that section is effective “Upon the expiration of the 2-year period which begins on the date of enactment of this Act [
June 8, 1979]”. Expiration of 1942 AmendmentAmendment of the proviso of this section by act Mar. 27, 1942, remained in force only until the date fixed by section 645 of the former Appendix to Title 50, War and National Defense, after which provisions in force before the amendment again became effective. Before the 1942 amendment, the proviso of this section read: “Provided, That any bonds, notes, or other obligations which are direct obligations of the United States or which are fully guaranteed by the United States as to principal and interest may be bought and sold without regard to maturities but only in the open market.”
Reference
Citations & Metadata
Citation
12 U.S.C. § 355
Title 12 — Banks and Banking
Last Updated
Apr 6, 2026
Release point: 119-73