Transactions In Bank Acceptances In The Open Market
Description
This section is from the book "Modern Banking; Commercial And Credit Paper", by Frederick Silver. Also available from Amazon: Modern banking; Commercial and credit paper.
Transactions In Bank Acceptances In The Open Market
Definition Of Bankers' Acceptances
A banker's acceptance is a bill of exchange, of which the acceptor is a bank or trust company, or a firm, person, company, or corporation, engaged in the business of granting bankers' acceptance credits.
Eligible Bank Acceptances
Cable Transfers And Bankers' Acceptances
Any Federal Reserve bank may purchase and sell cable transfers and bankers' acceptances of the kinds and maturities by the Federal Reserve Act made eligible for rediscount, with or without the indorsement of a member bank. (See Regulations following).
Regulations Of The Federal Reserve Board
Conditions Governing Eligibility
To be eligible for purchase, the bill must have been drawn under a credit open for the purpose of conducting or settling accounts resulting from a transaction or transactions involving:
(1) The shipment of goods between the United States and any foreign country, or between the United States and any of its dependencies or insular possessions or between foreign countries;
(2) The shipment of goods within the United States, provided the bill at the time of its acceptance is accompanied by shipping documents;
(3) The storage within the United States of readily marketable goods, provided the acceptor of the bill is secured by warehouse, terminal or other similar receipt;
(4) The storage within the United States of goods which have been actually sold, provided the acceptor of the bill is secured by the pledge of such goods;
(5) It must be a bill drawn by a bank or banker in a foreign country, or dependency, or insular possession of the United States, for the purpose of furnishing dollar exchange. The bank or banker in the latter case drawing the bill must be in a country, dependency, or possession, whose usages of trade have been determined by the Federal Reserve Board to require the drawing of bills of this character.
Opinions Of Counsel And Rulings Relating to Eligible Bank Acceptances
Accepted Commercial Paper Secured By Bullion Shipments
Gold bars may be considered as goods, and, therefore, sixty day bills, when accepted by banks and bankers against such shipments, would be eligible for purchase by Federal Reserve banks as based upon or involving the exportation of goods. Gold coin may also be properly considered as goods, and, therefore, a bill of exchange drawn to finance a shipment of gold coin from this country is eligible for purchase by a Federal Reserve bank if otherwise in conformity with the provisions of the law and the regulations of the Federal Reserve Board.
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