What is the definition of Federal Funds?
Federal Funds refer to funds or reserve balances that banks and other depository institutions borrow and lend on an overnight basis.
Banks are required to keep a certain amount of money at the Federal Reserve as their bank reserves and to clear other financial transactions as well. However, there are times when banks have extra cash - more than what they are required to have in their reserve accounts. Banks either lend this to other banks overnight (with reserve deficiencies) or deposit the money in a Federal Reserve bank for a certain interest. This rate of interest is called the federal funds rate.
This process enables idle funds to yield a return.
Federal Funds also describe the money that is used to buy government securities in an effort to tighten money supply and prevent inflation. It does this by taking the money out of circulation.
| Not a bit | Very useful |
- Federal Insurance Administration (FIA)
- Federal Reserve Board
- Fidelity Bond
- Fiduciary Bond
- Fiduciary Liability
- File-and-Use States
- Financial Guarantee Insurance
- Financial Responsibility Law
- Finite Risk Reinsurance
- Fire Insurance
- Farmowners-Ranchowners Insurance
- Family Benefit Coverage
- Fair Access to Insurance Requirements Plans / Fair Plans
- Facultative Reinsurance
- Face Amount
- Extended Term Insurance Option
- Extended Replacement Cost Coverage
- Extended Coverage
- Exposure
- Experience