What is a Federal Reserve Float?

Checkbook money that for a period of time appears on the books of both the payor and payee due to the lag in the collection Process. Federal Reserve float often arises during the Federal Reserve's check collection process. In order to promote an efficient payments mechanism with certainty as to the date funds become available, the Federal Reserve has employed the policy of crediting the reserve accounts of depository institutions depositing checks according to an availability schedule before the Federal Reserve is able to obtain payment from others.