Excess Balance Account Frequently Asked Questions

Roles and Responsibilities

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Q: What is the Federal Reserve Bank's role with respect to an excess balance account?

A: The Federal Reserve Banks have set forth terms and conditions for establishing and operating excess balance accounts, including terms and conditions relating to fees for services, requirements and restrictions for agents, charges for noncompliance, and account termination. The Federal Reserve Banks will calculate and pay interest on the average, aggregate balance in an excess balance account over a one-week reserve maintenance period. The Federal Reserve Banks may, at their discretion, request records pertaining to an excess balance account from the agent that manages it.

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Q: What are the responsibilities of an agent for an excess balance account?

A: The responsibilities of an agent for an excess balance account include: 1) Following participants’ instructions for making deposits to or withdrawals from or otherwise handling balances in the excess balance account; 2) Allocating interest payments to the participants holding excess balances in the excess balance account; 3) Maintaining adequate records to demonstrate the excess balances in the excess balance account attributable to each participant; and 4) Complying with any other terms and conditions for the maintenance and operation of the excess balance account as established by the Federal Reserve Banks.

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Q: What are the responsibilities of the participants with respect to an excess balance account?

A: The responsibilities of a participant in an excess balance account include: 1) Selecting an agent; and 2) Providing instruction to the agent for the handling of the participant’s balances in the account, including instructions about the distribution of interest earned on the balance attributable to the participant, withdrawals from and deposits to the excess balance account, and the timing of such transactions.

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Q: What are the agent's responsibilities for reporting to the Federal Reserve Bank?

A: The responsibilities of an agent include submitting any information relating to the excess balance account to its Federal Reserve Bank upon request, including but not limited to, reports of participant balances in the account and the agent’s procedures for tracking participant balances and crediting interest payments. On an ongoing basis, the agent must provide its Federal Reserve Bank with all amendments to the Excess Balance Account Agreement that make additions to, or deletions from, the list of participants in the excess balance account managed by the agent.

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Q: Can an institution be a participant in multiple excess balance accounts?

A: No. An institution is limited to participating in only one excess balance account at a time.

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Q: Can an institution act as agent for multiple excess balance accounts?

A: No. An agent is limited to acting as agent for only one excess balance account.

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Q: Must participants in an excess balance account be located in the same Federal Reserve District as the agent?

A: No. The agent for the excess balance account may be located in a different Federal Reserve District than the participants in the excess balance account. The participants may also be located in different Federal Reserve Districts from each other.

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