As of Adjustment: A Comprehensive Guide to Its Legal Meaning
Definition & Meaning
The term "as of adjustment" refers to a financial transaction that involves either a debit or credit applied to a bank's reserve or clearing balance. This adjustment is made for the purpose of maintaining the required balance and occurs when a bank sends or receives a payment order through a Federal Reserve Bank. Essentially, it serves as an alternative to charging interest or making a payment for these transactions.
Legal Use & context
This term is primarily used in the banking and financial sectors, particularly in relation to transactions processed through the Federal Reserve System. It is relevant in legal contexts involving banking regulations, financial compliance, and the management of funds. Users may find it useful when dealing with forms related to bank transactions or when navigating issues regarding reserve requirements.
Real-world examples
Here are a couple of examples of abatement:
Example 1: A bank sends a payment order to a Federal Reserve Bank for a large transaction. To maintain its required reserve balance, the Federal Reserve applies an as of adjustment to the bank's account, ensuring it meets regulatory requirements.
Example 2: A bank receives a payment order from a Federal Reserve Bank. To avoid a penalty for not maintaining sufficient reserves, the bank receives a credit adjustment to its clearing balance (hypothetical example).