Use and Importance of Pledging Requirements for Public Deposits

The Government Finance Officers Association (GFOA) is aware of the extensive use and major importance of pledging requirements, whereby state and local government deposits in financial institutions must be secured by governmental obligations pledged for that purpose.

Because these requirements protect state and local depositors, the Government Finance Officers Association is in favor of the use of pledging requirements either as protection for state and local governments either as incentives for use state and local obligations in the satisfaction of such pledges. The Association continues to oppose legislation that would directly or indirectly diminish the use and value of pledging requirements as protection for state and local government deposits. Consistent with the foregoing, the Association further favors and encourages state and local governments to establish adequate and efficient administrative systems to monitor and maintain such pledged collateral, including state or locally administered collateral pledging or collateral pools.

• Publication date: April 1984