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In economics, float makes up the smallest part of the money supply. Float occurs when there is a delay in the clearing of payments between banks. It is most obvious in the time delay between a cheque being written and the funds to cover that cheque being deducted from the payer's account. Face-to-face trading interactions on the New York Stock Exchange trading floor. ... In macroeconomics, money supply (monetary aggregates, money stock) is the quantity of currency and money in bank accounts in the hands of the non-bank public available within the economy to purchase goods, services, and securities. ...

Once the recipient of a cheque (the payee) deposits it in their account, their bank immediately credits (increases) the payee's account, assuming that the payer's bank will ultimately send the funds to cover the cheque. Until the payer's bank actually sends the funds, both the payer and the payee have the "same" money in both of their accounts.

Once the payee's bank notifies the payer's bank (usually by presenting the checks), the "duplicate" funds will be removed from the payer's account and the checks will be considered to have "cleared" the bank.

Float causes marginal changes in the money supply. Before electronic cheque clearing, bad weather or communication problems often caused float to significantly increase, as the clearing of cheques was delayed. In some cases in the United States, the Federal Reserve had to engage in open market operations to counteract the effects of changing float. For other uses, see United States (disambiguation) and US (disambiguation). ... The Federal Reserve System is headquartered in the Eccles Building on Constitution Avenue in Washington, DC. The Federal Reserve System (also the Federal Reserve; informally The Fed) is the central banking system of the United States. ... Open Market Operations are the means by which central banks control the liquidity of the national currency. ...

Another aspect of float time is its use to defraud, commonly known as cheque kiting. Electronic cheques and particularly the Check Clearing for the 21st Century Act in the United States (or Check 21 as it is more commonly called) are designed to target this kind of fraud. Check kiting is any sort of fraud that involves drawing out money from one bank account that does not have sufficient funds to cover the check. ... The Check Clearing for the 21st Century Act (or Check 21 Act) is a United States federal law (public Law 108-100) enacted into law October 28, 2003 by the 108th Congress. ...

In Check Clearing banks refer to Bank Float and Customer Float. Bank Float is the time it takes to clear the item from the time it was deposited to the time the funds were credited to the depositing bank. Customer float is defined as the span of time from the time of the deposit to the time the funds are released for use by the depositor. The difference between the bank float and the customer float is called "Negative Float". Negative Float is used by the bank as the overnight investable funds.