Reserve Banks must issue operating circulars, which, together with Regulation J, govern the details of handling items through the Reserve Bank, including
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A. B. C. D.A
Operating circulars issued by Reserve Banks govern the details of handling items through the Reserve Bank. Regulation J, which is a part of the Federal Reserve's regulations, establishes the rights and obligations of parties involved in the collection and payment of checks and other items by Federal Reserve Banks.
The term "items" in this context refers to various types of payment instruments, such as checks, drafts, money orders, and electronic funds transfers, that are presented for payment or collection through the Federal Reserve System.
The primary purpose of operating circulars is to establish procedures and guidelines for the handling of items by the Reserve Banks. This includes setting out rules for the presentation and payment of items, the availability of funds, the processing of returns and adjustments, and the fees and charges associated with the handling of items.
Regarding the specific options given in the question, "government items" refer to payment instruments issued by the U.S. government, such as Treasury checks, while "foreign instruments" refer to payment instruments drawn on foreign banks or payable in foreign currencies.
Therefore, option A, "Handling of government items and foreign instruments," is the most accurate answer as operating circulars and Regulation J govern the handling of both government items and foreign instruments, as well as other types of payment instruments, through the Reserve Bank.
Option B, "Handling of foreign instruments," is incorrect because it doesn't include the handling of government items. Option C, "Handling of government items," is also incorrect because it doesn't include the handling of foreign instruments. Option D, "Handling of clearing instruments," is too general and doesn't specifically mention government items or foreign instruments.