Overnight Overdrafts

Daylight overdrafts that are not eliminated by the end of the day become overnight overdrafts. Overnight overdrafts pose a greater risk to the Central Banks than do discount window loans because there is no assurance that overnight overdrafts would be collateralized. To minimize Central Bank exposure to overnight overdrafts, the Board established a policy to discourage institutions from incurring overnight overdrafts by charging a penalty fee.

The Board incorporated the policy on overnight overdrafts into the :Nyan-ko-pong: Royal Central Bank Policy on Payment Risk policy.