The facilities of the gold settlement fund have been extended to all branches of federal reserve banks which carry deposit accounts of member banks, thus simplifying the accounting between the head offices and the branch banks. These branches make direct settlements through the fund in the same manner as the federal reserve banks, except that the net debit or credit balance in the settlement of each branch is adjusted through the account of the head office, as the branches do not maintain accounts with the fund.
At the close of business each night each federal reserve bank wires the Federal Reserve Board the aggregate amounts credited that day to each other federal reserve bank. A private wire service is established between Washington and the federal reserve banks, as well as between the banks themselves. On the following morning the board, having received twelve telegrams, charges each sending bank in the gold settlement fund with the aggregate amount stated in its telegram, distributing the individual credits as therein advised. The board then credits each of the twelve banks in the fund with the aggregate of its individual credits telegraphed by the other banks and sends an appropriate telegraphic advice to each bank credited.
Each federal reserve bank, in addition to the telegram to the board, as outlined above, prepares a statement of the details with proper description for the use of each other federal reserve bank whose account in the gold settlement fund had received credit. This letter is proved against the telegram and is then sent by first mail to the board.
The reserve banks, in addition to the daily clearing, have the privilege of demanding transfers at any time when a net debit balance is shown in account with other federal reserve banks.
Deficiencies in the fund are covered either by the deposit of gold, gold certificates, or gold order certificates in the Treasury, or by credit operations, including rediscounts with other federal reserve banks which have an excess balance in the gold settlement fund. A fund similar to the gold settlement fund has been created for the federal reserve agents, and by it the making of payments not only between federal reserve banks but also between a federal reserve agent and his own bank, is rendered possible without the shipping back and forth of gold or currency.