On Fedwire,daylight overdraft
A)is a bank's positive intraday balance in its reserve account at the Fed.
B)does not occur under the current payments system.
C)invites a fee is 50 basis points,quoted as an annual rate on the basis of a 24-hour day.
D)has a seasonal component.

Question

Quizplus · Accepted Answer

Daylight overdraft on Fedwire occurs when a bank's Federal Reserve account balance goes negative during the day due to payment activity. If a bank incurs a daylight overdraft, it is charged a fee of 50 basis points on the overdraft amount, quoted as an annual rate on the basis of a 24-hour day. This fee is designed to encourage banks to actively manage their Fedwire activity and maintain positive balances in their reserve accounts.

On Fedwire,daylight Overdraft