The paid-in capital of the reserve banks (item 15) amounts to 3 per cent of the capital and surplus of the member banks. The surplus of the reserve banks (item 16) now exceeds their capital and this item will continue to increase, for 10 per cent of the net earnings are converted to surplus after the surplus of a reserve bank reaches 100 per cent of its capital. The other 3 per cent of the capital subscription remains as a contingent asset of the bank.
The deposits of the reserve banks are liabilities to the government (item 17) and to the member banks for reserve account (item 18), and to the banks which have sent collection items whose availability has been deferred (item 19). The reserve of a member bank consists of the deposit rights against the federal reserve bank. The balance of a member bank with its reserve bank is divided into "account current" and "reserve account," and transfers from one account to the other can be made at the member's instance.