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PROPOSED REVISIONS TO CALCULATION METHODS FOR PRICED SERVICES.



The Federal Reserve Board on December 21, 2000, proposed revisions to the methods used for calculating the private-sector adjustment factor (PSAF PSAF Private Sector Adjustment Factor ) and net income on clearing balances (NICB NICB National Insurance Crime Bureau
NICB Nebraska Independent Community Bankers
NICB National Institute for Cellular Biotechnology (Ireland)
NICB National Intelligence Collection Board
). The Board requested comment by April 6, 2001.

The PSAF imputes the costs that would have been incurred and profits that would have been earned had the Reserve Banks' priced services been provided by a private firm.

The NICB imputes income on the investment of depository The place where a deposit is placed and kept, e.g., a bank, savings and loan institution, credit union, or trust company. A place where something is deposited or stored as for safekeeping or convenience, e.g., a safety deposit box.  institutions' clearing balances held with the Reserve Banks, less related costs.

The Monetary Control Act of 1980 requires that the Federal Reserve set fees for its services to recover, over the long term, its actual costs of providing the services, as well as these imputed Attributed vicariously.

In the legal sense, the term imputed is used to describe an action, fact, or quality, the knowledge of which is charged to an individual based upon the actions of another for whom the individual is responsible rather than on the individual's
 costs and profits. The Board reviews its method for calculating the PSAF periodically to assess whether it is still appropriate in light of the changing environment.

The Board's proposal would base the PSAF on a priced-services balance sheet that resembles that of a private business, using real assets Real assets

Identifiable assets, such as land and buildings, equipment, patents, and trademarks, as distinguished from a financial investment.
 and liabilities, imputing liabilities and equity only to the extent necessary, and more appropriately reflecting the risk inherent in priced-service activity.

Separately, the Board made available a related research paper proposing a new approach for calculating the cost of equity capital used in the PSAF. The paper has been posted on the Internet Internet

Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the
 at: www.federalreserve.gov/press/boardacts/2000/ 200012212/researchpaper.pdf.
COPYRIGHT 2001 Board of Governors of the Federal Reserve System
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2001, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Federal Reserve Bulletin
Article Type:Brief Article
Geographic Code:1USA
Date:Feb 1, 2001
Words:230
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