Booklet: FedLine®
Section: Appendix B: Glossary
 

 

 

 

 

Authentication

The process of verifying the claimed identity of an individual user, machine, software component, or any other entity.
Clearance The process of transmitting, reconciling, and in some cases, confirming payment orders or financial instrument transfer instructions prior to settlement.
Encryption A data security technique used to protect information from unauthorized inspection or alteration. Information is encoded so that data appears as a meaningless string of letters and symbols during delivery or transmission. Upon receipt, the information is decoded using an encryption key. Refer to the IT Handbook’s “Information Security Booklet” for more information.
Federal Reserve Banks The Federal Reserve Banks provide a variety of financial services, including funds transfer, book-entry securities, ACH, and clearing and settling checks drawn on depository institutions located in all regions of the United States.
FedLine FedLine is the Federal Reserve Bank’s proprietary electronic platform providing a common electronic delivery channel for financial institution access to Federal Reserve financial services including Fedwire funds transfer.
Fedwire The Federal Reserve System’s nationwide real-time gross settlement electronic funds and securities transfer network. Fedwire is a credit transfer system, and each funds transfer is settled individually against an institution’s reserve or clearing account on the books of the Federal Reserve as it is processed and is considered a final and irrevocable payment.
Finality Irrevocable and unconditional transfer of payment during settlement.

Finality

Irrevocable and unconditional transfer of payment during settlement.
OFAC The Office of Foreign Assets Control (OFAC), within the U.S. Department of the Treasury, administers and enforces economic and trade sanctions against targeted foreign countries, terrorism-sponsoring organizations, and international narcotics traffickers based on U.S. foreign policy and national security goals.
Payment A transfer of value.
Reserve Account A noninterest earning balance that depository institutions maintain with the Federal Reserve Bank or with a correspondent bank to satisfy the Federal Reserve’s reserve requirements. Reserve account balances play a central role in the exchange of funds between depository institutions.
Reserve Requirements The percentage of deposits that a financial institution may not lend out or invest and must hold either as vault cash or on deposit at a Federal Reserve Bank. Reserve requirements affect the potential of the banking system to create transaction deposits.
Settlement The final step in the transfer of ownership involving the physical exchange of securities or payment. In a banking transaction, settlement is the process of recording the debit and credit positions of the parties involved in a transfer of funds. In a financial instrument transaction, settlement includes both the transfer of securities by the seller and the payment by the buyer. Settlements can be "gross" or "net.” Gross settlement means each transaction is settled individually. Net settlement means that parties exchanging payments will offset mutual obligations to deliver identical items (e.g., dollars and EUROs), at a specified time, after which only one net amount of each item is exchanged.