Title 12 — Banks and BankingRelease 119-73
§412 Application for notes; collateral required
Title 12 › Chapter CHAPTER 3— - FEDERAL RESERVE SYSTEM › Subchapter SUBCHAPTER XII— - FEDERAL RESERVE NOTES › § 412
Summary
A Federal Reserve Bank can ask its local Federal Reserve agent for as many Federal Reserve notes as it needs. The bank must give collateral equal to the amount it asks for. Acceptable collateral includes certain notes, drafts, bills of exchange, and acceptances bought under sections 92, 342–348, 349–352, 361, 372, or 373; bankers’ acceptances and similar assets bought under sections 348a and 353–359; gold certificates; Special Drawing Right certificates; U.S. government obligations or those fully guaranteed by the U.S.; or other Federal Reserve assets. The collateral must at least match the value of the notes. The local agent must tell the Board of Governors each day about issues and withdrawals of notes. The Board can require more security at any time. No collateral is needed for notes held in a Federal Reserve bank’s vaults or held for it.
Full Legal Text
Title 12, §412
Banks and Banking — Source: USLM XML via OLRC
Any Federal Reserve bank may make application to the local Federal Reserve agent for such amount of the Federal Reserve notes hereinbefore provided for as it may require. Such application shall be accompanied with a tender to the local Federal Reserve agent of collateral in amount equal to the sum of the Federal Reserve notes thus applied for and issued pursuant to such application. The collateral security thus offered shall be notes, drafts, bills of exchange, or acceptances acquired under section 92, 342 to 348, 349 to 352, 361, 372, or 373 of this title, or bills of exchange endorsed by a member bank of any Federal Reserve district and purchased under the provisions of section 348a and 353 to 359 of this title, or bankers’ acceptances purchased under the provisions of said section 348a and 353 to 359 of this title, or gold certificates, or Special Drawing Right certificates, or any obligations which are direct obligations of, or are fully guaranteed as to principal and interest by, the United States or any agency thereof, or assets that Federal Reserve banks may purchase or hold under section 348a and 353 to 359 of this title or any other asset of a Federal Reserve bank. In no event shall such collateral security be less than the amount of Federal Reserve notes applied for. The Federal Reserve agent shall each day notify the Board of Governors of the Federal Reserve System of all issues and withdrawals of Federal Reserve notes to and by the Federal Reserve bank to which he is accredited. The said Board of Governors of the Federal Reserve System may at any time call upon a Federal Reserve bank for additional security to protect the Federal Reserve notes issued to it. Collateral shall not be required for Federal Reserve notes which are held in the vaults of, or are otherwise held by or on behalf of, Federal Reserve banks.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Codification Section is comprised of second par. of section 16 of act Dec. 23, 1913. For classification to this title of other pars. of section 16, see Codification note set out under section 411 of this title.
Amendments
2003—Pub. L. 108–100 inserted “or any other asset of a Federal Reserve bank” before period at end of third sentence and “, or are otherwise held by or on behalf of,” after “in the vaults of” in last sentence. 1999—Pub. L. 106–122 substituted “acceptances acquired under section 92, 342 to 348, 349 to 352, 361, 372, or 373 of this title” for “acceptances acquired under the provisions of section 92, 342 to 347, 347c, 347d, 361, 372, and 373 of this title”. 1980—Pub. L. 96–221 inserted provisions relating to purchase, etc., of assets by Federal Reserve banks, and eliminating collateral requirement for Federal Reserve notes held in Federal Reserve bank vaults. 1978—Pub. L. 95–630 substituted “any obligations which are direct obligations of, or are fully guaranteed as to principal and interest by, the United States or any agency thereof” of “direct obligations of the United States”. 1968—Pub. L. 90–349 added Special Drawing Right certificates to the types of allowable collateral security which may be tendered for Federal Reserve notes. 1945—Act
June 12, 1945, substituted “, or direct obligations of the United States.” for proviso after “gold certificates” in first sentence which limited period during which direct obligations of the United States could be accepted as collateral security. 1943—Act
May 25, 1943, substituted “
June 30, 1945” for “
June 30, 1943,” in proviso. 1941—Act
June 30, 1941, substituted “
June 30, 1943” for “
June 30, 1941” in proviso. 1939—Act
June 30, 1939, substituted “
June 30, 1941” for “
June 30, 1939” in proviso. 1937—Act Mar. 1, 1937, extended until
June 30, 1939, period within which direct obligations of the United States may be accepted as collateral security under this section, and struck out provision authorizing President to extend period. 1934—Act Mar. 6, 1934, amended proviso and two sentences immediately following. Act Jan. 30, 1934, amended portion of third sentence before proviso. 1933—Act Feb. 3, 1933, substituted “
March 3, 1934” for “
March 3, 1933” wherever appearing. 1932—Act Feb. 27, 1932, inserted proviso and two sentences immediately following.
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
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 a note under section 248 of this title.
Effective Date
of 1978 AmendmentAmendment effective upon expiration of 120 days after Nov. 10, 1978, see sec. 2101 of Pub. L. 95–630 set out as an
Effective Date
note under section 375b of this title. United States Obligations as Collateral; Extension of PeriodThe period within which direct obligations of the United States could be accepted as collateral security under this section was extended to Mar. 3, 1937, by Proclamation No. 2117, of Feb. 14, 1935, 49 Stat. 3437; extended to
June 30, 1939, by act Mar. 1, 1937; extended to
June 30, 1941, by act
June 30, 1939; extended to
June 30, 1943, by act
June 30, 1941; and extended to
June 30, 1945, by act
May 25, 1943. Act
June 12, 1945, amended section to remove the time limitation.
Reference
Citations & Metadata
Citation
12 U.S.C. § 412
Title 12 — Banks and Banking
Last Updated
Apr 6, 2026
Release point: 119-73