As an example, consider the following. At this time the accounts will be settled and the float will disappear. Many banks send their checks to larger banks and private associations that provide check clearing services. Of course, this is fee based and competes with the Fed. Because float in the banking system artificially inflates the level of bank reserves, it can have a major impact on monetary policy.
Float can appear quickly and without warning.
It fluctuates randomly and is nearly impossible to predict. As a result, the Federal Reserve must sometimes act to offset short-term instability in the monetary aggregates caused by float. This is done through purchases and sales of U.S. government securities by the use of open market operations at the Federal Reserve Bank of New York. There is also a term called Holdover Float. Holdover float refers to float that is caused by delays at the processing institution.