amounts to be transferred in any manner 
for the benefit of a third party. 
(ii) FIXED-TERM
SAVINGS
NOT
IN-
SURED.—Any account described in clause 
(i) may not be treated as a deposit, for 
purposes of the Federal Deposit Insurance 
Act, or as a share draft account, for pur-
poses of the Federal Credit Union Act. 
(2) OUTSTANDING CREDIT.—Any asset of a de-
pository institution that results from credit extended 
against, is attributable to, or has been accounted for 
with respect to, amounts described in paragraph 
(1)(A) shall, as of the effective date— 
(A) be a liability of the depository institu-
tion to the Federal Government; and 
(B) as the outstanding balance is repaid 
pursuant to its terms, shall be paid over to the 
Federal Government. 
(3) DEPOSIT IN REVOLVING FUND.—The mon-
ies paid to the Federal Government shall be depos-
ited into the Revolving Account established in sec-
tion 403. 
(4) IN GENERAL.—Before the effective date and 
subject to the requirements of this section, the Mon-
etary Authority shall establish and publish the ac-
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counting rules, pricing, and processes which will con-
vert all bank credit in circulation as of the date of 
such conversion, into United States legal tender 
money. 
(5) RETENTION OF INTEREST PAYMENTS.—A 
depository institution may keep as income, any in-
terest payment made by a customer to a depository 
institution on an outstanding loan for which the de-
pository institution became indebted to the Federal 
Government under paragraph (2). 
(b) TREATMENT OF AMOUNTS ON RESERVE AT A 
FEDERAL RESERVE BANK.—The Monetary Authority 
shall determine, by the effective date, how the reserves of 
a depository institution at a Federal reserve bank pursu-
ant to section 19 of the Federal Reserve Act shall be treat-
ed, so as to promote a seamless transition to the new sys-
tem. 
(c) ACCOUNTS IN GENERAL.—Before the effective 
date, the Monetary Authority shall prescribe new lending 
and accounting regulations for various types of accounts 
including transaction accounts and time deposit accounts 
described in subsections (d) and (e). 
(d) TRANSACTION ACCOUNTS.— 
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(1) FRACTIONAL RESERVE BANKING ENDED.— 
The regulations prescribed under subsection (c) shall 
provide that— 
(A) any depository institution shall have a 
fiduciary responsibility for the money of any de-
positor on deposit in a transaction account 
which— 
(i) shall be held for the exclusive use 
of the account holder; and 
(ii) may not be used by a depository 
institution to fund loans or investments; 
(B) a dollar of United States Money shall 
be on hand or in a Federal Government account 
for each dollar in a transaction account; and 
(C) a depository institution may charge a 
reasonable fee for providing transaction account 
services. 
(2) TRANSACTION
ACCOUNT
DEFINED.—For 
purposes of this section, the term, ‘‘transaction ac-
count’’— 
(A) means a deposit or account on which 
the depositor or account holder is permitted to 
make withdrawals by negotiable or transferable 
instrument, payment orders of withdrawal, tele-
phone transfers, or other similar items for the 
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purpose of making payments or transfers to 
third persons or others; and 
(B) includes demand deposits, negotiable 
order of withdrawal accounts, savings deposits 
subject to automatic transfers, and share draft 
accounts. 
(e) UNITED
STATES
MONEY
AS
SOURCE
OF 
LOANS.—After the effective date, all lending by depository 
institutions may be accomplished only by the lending of 
actual United States Money that is— 
(1) owned by the depository institution from 
earnings and or capital contributions by investors; 
(2) borrowed at interest from the Federal Gov-
ernment; or 
(3) borrowed at interest through the issuance of 
bonds or other interest-bearing securities by the 
lending bank, to the extent that such bonds or secu-
rities are structured in a manner consistent with the 
purposes of this Act. 
(f) ENCOURAGEMENT OF PRIVATE, PROFIT-MAKING 
MONEY LENDING ACTIVITY.—The regulations prescribed 
and actions taken under this section shall be established 
and taken in a manner that— 
(1) encourages private, profit-making money 
lending activity by banking institutions; and 
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(2) prohibits the creation of private money 
through the establishment of lending credit against 
depository receipts, sometimes referred to as ‘‘frac-
tional reserve banking’’. 
SEC. 403. ESTABLISHMENT OF FEDERAL REVOLVING FUND. 
(a) REVOLVING LOAN FUND.—Subject to provision 
in advance in an appropriation Act, there is hereby estab-
lished a revolving loan fund in the Treasury of the United 
States where amounts received from depository institu-
tions under terms specified in section 402 of this Act shall 
be deposited and made available for relending to banking 
institutions and for other purposes. 
(b) ADMINISTRATION.—The Revolving Fund shall be 
administered by the Bureau under such terms and condi-
tions as the Secretary shall prescribe consistent with the 
purposes of this Act. 
(c) NATIONAL EMERGENCY.—In the event of a find-
ing by the President that a National Emergency exists, 
and with the concurrence of the Congress in accordance 
with the emergency procedures specified under section 
305, the Secretary, on the advice of the Monetary Author-
ity, may draw upon up to 80 percent of the funds on de-
posit in the Revolving Fund. Such funds shall be returned 
to the Revolving Fund within 3 years of the date of initial 
disbursement, either through repayment of loans or 
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