Central Bank & International Account Services

The New York Fed provides U.S. dollar-denominated banking services to foreign official and international institutions in support of Federal Reserve objectives and in recognition of the dollar’s predominant role as an international currency.

Services for foreign central banks, monetary authorities, and international organizations include funds, securities, and gold safekeeping; securities clearing, settlement, and investment; and correspondent banking, in which one bank (the correspondent) holds the deposits of and provides payment and other services to another bank (the respondent). Central banks rely on correspondent banking and custody services to safely, confidentially, and efficiently execute on core official sector functions.

By providing these banking services, the Federal Reserve enables foreign official and international institutions to make cross-border payments; invest, settle, and hold in safekeeping U.S. dollar reserves; and maintain a network of banking channels that they can employ to stabilize financial markets in times of stress. On behalf of the Federal Reserve System, the New York Fed has provided account services to the global official community since 1917.

Banking Services Available to Account Holders

The New York Fed provides services to foreign official and international institutions that facilitate the execution of public-sector mandates such as foreign reserves management, international relief and assistance, and financial stability. There are over 200 account holders maintaining more than 550 deposit and custody accounts at the New York Fed. Foreign central banks and monetary authorities hold the vast majority of these accounts, with international and regional organizations, foreign governments, and specialized accounts comprising the remainder.

In addition, the New York Fed provides training to other central banks, including an annual central banking seminar and training programs in central bank operations.

Safekeeping Services

The New York Fed provides custodial services, including facilitating the receipt of 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 institutions. The New York Fed also provides clearing and settlement services for account holders’ securities transactions.

Most of the assets held in custody at the New York Fed are in the form of marketable U.S. government and agency securities.

In addition, the New York Fed provides vault facilities to foreign official institutions for the deposit and safekeeping of gold. Foreign official gold reserves have been held in custody in the New York Fed's gold vault since 1924 for a number of reasons, including physical safety from international conflicts and the convenience of centralizing gold holdings to facilitate efficient international transactions.

In aggregate, the New York Fed holds in custody a significant portion of the world’s U.S. dollar and gold reserves.

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Payment Services

Foreign official institutions may establish deposit accounts at the New York Fed for the purpose of receiving and making payments in U.S. dollars.

These accounts help institutions access the U.S. financial system for time-critical U.S. dollar transfers that are official in nature, such as paying interest on outstanding debt, facilitating government operations, or enabling timely settlement of investments, among other needs.

Foreign official account holders may send and receive U.S. dollars via the Federal Reserve’s Fedwire® Funds Service. The New York Fed also manages physical currency: Account holders may send U.S. currency to the New York Fed for deposit, or arrange to have banknotes shipped by the New York Fed when they are in need of them. At an account holder’s request, the New York Fed will execute foreign exchange transactions for the purchase or sale of certain non-dollar currencies in order to facilitate non-dollar funds transfers.

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Investment Services

The New York Fed provides a limited set of investment services to foreign official institutions, primarily to aid with their funds and liquidity management. The two primary offerings are a pooled foreign overnight reverse repurchase agreement (the foreign repo pool), and the purchase or sale of U.S. government securities.

The foreign repo pool is a short-term U.S. dollar money-market investment that also supports account holders’ daily cash management needs related to the settlement of payments and securities transactions. Account holders that opt to participate in the foreign repo pool instruct the New York Fed to invest certain end-of-day cash balances in an overnight repurchase agreement under which securities are purchased from the Federal Reserve’s System Open Market Account (SOMA). At maturity, on the following business day, the securities are repurchased by the SOMA at a repurchase price that includes a return calculated at a rate generally equivalent to the New York Fed’s overnight reverse repurchase operations (ON RRP), although the New York Fed may vary the rate of return at any time without prior notice.

The New York Fed has been authorized by the Federal Open Market Committee (FOMC) to provide the foreign repo pool since the mid-1970s. The foreign repo pool operates separately from the implementation of monetary policy, but impacts the Federal Reserve’s balance sheet. As account holders’ demand for foreign repo pool investments increases or declines, the composition of the Federal Reserve’s liabilities shifts, resulting in a corresponding reduction or increase in the U.S. banking system’s reserves.

The New York Fed can also purchase and sell securities on an account holder’s behalf in U.S. government securities markets, either at auction or in the secondary market. These transactions are executed based on instructions from account holders and are not associated with the implementation of monetary policy.

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Central banks interested in learning more about the services offered to official international account holders should contact account.relations@ny.frb.org.