Federal Reserve System
The central banking system of the U.S., comprised of the Federal Reserve Board, the 12 Federal Reserve Banks, and the national and state member banks. Its primary purpose is to regulate the flow of money and credit in the country. The Federal Reserve was established in 1913 to maintain a sound and stable banking system throughout the United States and to promote a strong economy. The Board of Governors is made up of 7 members that are appointed to 14-year terms by the President and approved by the Senate. Almost all U.S. banks are a part of the Federal Reserve System, which requires that those banks maintain a certain percentage of their assets deposited with the regional Federal Reserve Bank. These “reserve requirements” are set by the Board of Governors and by changing the requirements, the Federal Reserve System can greatly impact the amount of money supply in the economy. The Federal Reserve System has several functions. First, it serves as a bank for banks: many transactions between banks are processed through the Federal Reserve System. Financial institutions are also able to borrow money through the Federal Reserve, but only after attempting to find credit elsewhere; the Federal Reserve System provides credit only when it cannot be found in the markets or in cases of emergency. Second, the Federal Reserve System acts as the government’s bank. The tax system processes incoming and outgoing payments through a Federal Reserve checking account. The Federal Reserve also buys and sells government securities. The Fed even issues the U.S. currency, although the actual production of the currency is handled elsewhere. Third, the Federal Reserve System acts as a regulatory agency. The Fed polices the banking industry to make sure that things run smoothly and that the rights of consumers are protected.

The number of shares of a security that are outstanding and available for trading by the public.
The amount of money or time represented by checks that are in transit between deposit and payment, or credit card purchases that are between the purchase and the payment.
To allow the value of currency to be determined solely by supply and demand without outside interference.

Flow of Funds
For municipal bonds, a statement that specifies the priorities for which the revenue will be used. Usually, the flow of funds goes from maintenance and operation to bond debt service to facility expansion to savings for prepayment of debt. For mutual funds, the movement of money into and out of mutual funds.

Forward Deal
A transaction consisting of a purchase or sale (often of foreign currency) with settlement to occur at a specified future date. Such a transaction will state the specific amount of the asset to be delivered at the specific time, as well as the unit price at which it will be delivered.
Term of the Day – fungible
Interchangeable. The term is often used to apply to financial instruments which are identical in specifications. For example, options and futures contracts are highly fungible, since they are highly standardized arrangements. On the other hand, forwards and swaps are not, since they are customized arrangements. Instruments that are highly fungible tend to be very liquid, and so transaction costs tend to be low.