Acceptability

Summary of Acceptability

As used in relation to the discount or re-discount of a negotiable instrument at the Federal Reserve, acceptability implies that the Bank regards the paper as sound and apt to be collectible upon maturity. Where the Bank has doubts concerning the maker, payee, or endorsers of an instrument, financial statements of the relevant parties may be required. Acceptability, which is basically a reflection of credit worthiness, is one of two criteria for the discount of an instrument. The other criterion is eligibility. Eligible Paper is considered here.

(Main Author: William J. Miller)