may be summarized as deliberately, inefficiency, logistical situation and compensation related mechanisms. Effect Float inflates the money supply. Countries can manipulate the worth of their currency by restricting or expanding the amount of float available to trade, and transfer agents of any kind effect a profit from holding this currency whether from a 12 hour or 5 day period. The float time of funds can be used to defraud, by misusing it as a form of unauthorized credit, commonly known as cheque kiting. Use In the 1970s and 1980s high inflation and high interest rates encouraged large companies to draw funds from remote banks to benefit from 'transportation float' which was called "remote disbursement". In 1973, the daily float average was $2.7 billion, and between 1975 and 1979, float more than tripled to a daily average of $6.6 billion. Float is used by commercial banks as the overnight investable funds. In order to smooth fluctuations in the aggregate level of bank reserves, Federal Reserve banks use their open market operation to buy and sell Government securities daily. Countries can restrict or expand the amount of float available to trade a currency. Countermeasures As part of the Monetary Control Act of 1980 the Federal Reserve System charged banks for float, which improved check processing efficiency. To reduce 'transportation float', banks have been able to scan their checks since the 1990s, and present them electronically at the Federal Reserve. With increasing electronic funds transfer, float averaged only $774 million per day in 2000, down from a daily average of $2.7 billion in 1973. Electronic cheques and particularly the Check Clearing for the 21st Century Act in the United States, or Check 21 as it is more commonly called, have been designed to target cheque kiting. See also Federal Reserve Banking References Monetary economics