GLOSSARY Terms related to the Federal Reserve, banking and economics   A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z |   401(K) plan A tax-deferred investment and savings plan that serves as a personal retirement fund for employees.   face value The principal amount of a bond, which will be paid off at maturity   fair market value The price a willing buyer will pay and a willing seller will accept for real or personal property.   Federal Advisory Council (FAC) Advisory group made up of one representative (in most cases a banker) from each of the 12 Federal Reserve Districts. Established by the Federal Reserve Act, the council meets periodically with the Board of Governors to discuss business and financial conditions and make recommendations.   Federal Deposit Insurance Corporation (FDIC)   federal funds Short-term transactions in immediately available funds between depository institutions and certain other institutions that maintain accounts with the Federal Reserve; usually not collateralized.   federal funds rate (funds rate) The interest rate at which banks borrow federal funds.   federal margin call A broker's demand upon a customer for cash, or securities needed to satisfy the required Regulation T down payment for a purchase or short sale of securities.   Federal Open Market Committee (FOMC)   Federal Reserve Act of 1913 Federal legislation that established the Federal Reserve System.   Federal Reserve Bank One of the 12 operating arms of the Federal Reserve System, located throughout the nation, that together with their 25 branches carry out various System functions, including operating a nationwide payments system, distributing the nation's currency and coin, supervising and regulating member banks and bank holding companies, and serving as banker for the U.S. Treasury.   Federal Reserve District (Reserve District or District) One of the twelve geographic regions served by a Federal Reserve Bank.   Federal Reserve float   Federal Reserve note Currency issued by the Federal Reserve. Nearly all of the nation's circulating paper currency consists of Federal Reserve notes printed by the Bureau of Engraving and Printing and issued to the Federal Reserve Banks, which put them into circulation through commercial banks and other depository institutions. Federal Reserve notes are obligations of the U.S. government.   Federal Reserve System The central bank of the United States, created by Congress and made up of a seven-member Board of Governors in Washington, D.C., 12 regional Federal Reserve Banks, and their 25 branches.   Fedwire Electronic funds transfer network operated by the Federal Reserve. Fedwire is usually used to transfer large amounts of funds and U.S. government securities from one institution's account at the Federal Reserve to another institution's account. It is also used by the U.S. Department of the Treasury and other federal agencies to collect and disburse funds.   fiat money Money that has little or no intrinsic value as a commodity; it is costless to produce, usually taking the form of tokens or pieces of paper; and is not redeemable for any commodity.   finance charge The total dollar amount paid to get credit.   finance company A company that makes loans to individuals.   financial institution An institution that uses its funds chiefly to purchase financial assets (loans, securities) as opposed to tangible property. Financial institutions can be classified according to the nature of the principal claims they issue. See also depository institution.   financing fee The fee a lender charges to originate a loan. The fee is based on a percentage of the loan amount; one point is equivalent to one percent.   fiscal agency services Services performed by the Federal Reserve Banks for the U.S. government. These include maintaining deposit accounts for the Treasury Department, paying U.S. government checks drawn on the Treasury, and issuing and redeeming savings bonds and other government securities.   fiscal policy The federal government's decisions about the amount of money it spends and collects in taxes to achieve a full employment and noninflationary economy.   fixed rate A traditional approach to determining the finance charge payable on an extension of credit. A predetermined and certain rate of interest is applied to the principal.   foreclosure The legal process used to force the payment of debt secured by collateral whereby the property is sold to satisfy the debt.   Full Employment and Balanced Growth Act of 1978 (Humphrey-Hawkins Act) Federal legislation that, among other things, specifies the primary objectives of U.S. economic policy--maximum employment, stable prices, and moderate long-term interest rates.   futures Contracts that require delivery of a commodity of specified quality and quantity, at a specified price, on a specified future date. Commodity futures are traded on a commodity exchange and are used for both speculation and hedging.