New York Fed Services for Central Banks and International Institutions

  • On behalf of the Federal Reserve System, the Federal Reserve Bank of New York offers banking and financial services to about 250 central banks, governments and international official institutions.
  • The New York Fed offers payment, custody and safekeeping, and investment services to its customers.
  • Most of the assets held in foreign official accounts are in the form of U.S. Treasury and agency securities. These accounts also hold a large quantity of foreign monetary gold at the New York Fed.

Overview
The New York Fed offers banking and financial services to about 250 central banks, governments and international official institutions on behalf of the Federal Reserve System. These consist of payment services, custodial services for securities and gold, and investment services. The Bank offers other services on an occasional basis, such as technical assistance and training for central bankers. The wide-ranging services the New York Fed offers to official international account holders have led the Bank to play a significant role in the worldwide financial system.

Payment Services
Foreign official account holders pay out and receive funds via the Federal Reserve's Funds Transfer System, commonly referred to as Fedwire®. For incoming payments, foreign and international account holders receive funds from correspondents through the Fedwire® Funds Service. For outgoing payments, customers send us payment instructions by authenticated SWIFT, and we execute payments through Fedwire®.

Account holders can also send U.S. currency to the Bank for deposit to their accounts. The customer’s account is credited with the amount of currency received. When central banks need U.S. currency and do not have a private arrangement in place for obtaining the currency, the New York Fed can assist its account holders to arrange the shipment of banknotes. The customer's account is charged for the amount of currency provided.

The New York Fed will, at a customer’s request, execute transactions for the purchase and sale of certain non-dollar currencies in the U.S. foreign-exchange market. In such transactions, the Bank acts as agent for its customers. These purchases and sales are not considered to be U.S. foreign exchange intervention, nor are they intended to reflect any policy initiative of the U.S. monetary authorities.

Custodial and Safekeeping Services
Most of the assets held in custody at the Bank in international official accounts are in the form of marketable U.S. government and agency securities. The New York Fed provides custodial services, including principal and interest payments, for Fedwire®-eligible securities, as well as for some non-Fedwire® securities through an arrangement with the Depository Trust and Clearing Corporation (DTCC) for eligible customers. The Bank also provides clearing and settlement services for customers’ securities transactions.

In addition to holding U.S. dollar-denominated assets, the New York Fed provides vault facilities to central banks and international official institutions for the deposit and safekeeping of gold. The Bank keeps the identity of all account holders to which vault services are provided confidential.

Investments
The New York Fed invests funds in money-market instruments on behalf of central bank and international official account holders. Investments may be in overnight repurchase agreements or U.S. Treasury and government-sponsored entity agency securities. The Bank can purchase and sell securities on a customer’s behalf according to the customer’s pre-determined standing instructions, or as requested on an individual basis. Customer instructions must specify the type of securities the account holder wants to buy. The Federal Reserve does not give investment advice.

Other Services
On a less frequent basis, the New York Fed provides other services to central banks and international official institutions. One of the services is an annual central banking seminar, which consists of a series of group discussions and lectures at the Bank on topics such as bank supervision, monetary policy implementation and portfolio management.

The New York Fed also provides onsite technical assistance to a requesting central bank in a variety of areas relating to central bank operations. This assistance ranges from how to implement new technology to how to run bank examinations.

May 2010

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