Member Bank

Bank that is a member of the Federal Reserve System, including all nationally chartered banks and any state-chartered banks that apply for membership and are accepted. Member banks are required to purchase stock in the Federal Reserve Bank in their districts. Half of that investment is carried as an asset of the member bank. The other half is callable by the Fed at any time. Member banks are also required to maintain a percentage of their deposits as reserves in the form of currency in their vaults and balances on deposit at their Fed district banks. These reserve balances make possible a range of money transfer and other services using the Fed Wire system to connect banks in different parts of the country.