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Definition: Edge Act Corporation
It is an banking institution chartered by United States Federal Reserve for all of its banking operations and other forms of businesses that the corporation is engaged in such that the state-by-state banking laws are not violated. United States banks can make gain by means of portfolio exposure to investment operations which were not possible under standard banking laws by setting up EDGE ACT corporations.
EDGE Act corporations were first implemented in 1919. After that its structure changed many times. Previously there were many restrictions which were limiting cross border banking activity. But many such restrictions were relaxed after its implementation as a result of which economies, more specifically financial institutions are much more global. Companies which were allowed to engage in international activities (cross border banking services including giving loans or taking deposits, trading firms, Airlines operating internationally) were also allowed after Edge act revisions in 1984. The monitoring right of ownership of these companies as well as the business activities and any investment in future will be retained by Federal Bank only.