1. Ordinary Drafts. In making remittances within its own district (that is, in cases in which exchange on another district is not demanded) the member should draw ordinary drafts. Such drafts are not receivable for immediate availability at par at any other federal reserve bank. In making these remittances it is not necessary to advise the federal reserve bank that the draft has been drawn.

2. Federal Reserve Exchange Drafts. These are to be used by the member bank when making remittances of an amount not exceeding $5,000 outside its district, or in any case where exchange on another district is demanded. These drafts are drawn on the member's reserve bank, and will be receivable for immediate availability at par at any other federal reserve bank, but are actually payable only at the drawee reserve bank. Members are required to forward to their reserve bank a daily mail advice of the numbers, amounts, and totals of these drafts drawn. On receipt of this advice the reserve bank charges the total given therein to the account of the member bank and the funds are held in a special account against which the drafts are charged when presented for payment.

3. Federal Reserve Transfer Drafts. These are to be used by the member in making remittances of sums in excess of $5,000, outside its district, or in any case where exchange on another district is demanded. These must be drawn on the member's federal reserve bank and made payable at one other federal reserve bank designated in the draft. Payment by the other federal reserve bank will be made only upon advice from the drawee reserve bank. Members drawing such drafts must give the drawee reserve bank daily advice of all drafts drawn, and must forward duplicates of the advice to the federal reserve banks at which the drafts are payable. Upon receipt of the advice the drawee reserve bank charges the account of the drawing bank, and provision for meeting the draft is made at the paying bank designated. Transfer drafts are not paid except upon receipt of the duplicate advice and confirmation by the drawee bank.

Member banks drawing federal reserve exchange or transfer drafts should provide sufficient excess balances with their federal reserve bank to cover the drafts, lest their reserves be impaired, and a penalty be thereby incurred. To effect uniformity of size, text, etc., and to get proper code words, the federal reserve bank supplies the member with blank drafts.

Although the member banks may sell these drafts to their customers under the same terms and conditions as the other drafts and may charge the purchaser, the use of these drafts will not necessarily supplant the use of drafts on correspondents.