Thirdly, their credit and prompt redemption is insured by certain elastic rules as to reserves in gold which must be kept for the redemption of outstanding notes.

Fourthly, they are secured by collateral, consisting of notes and bills accepted for rediscount from member banks, which must be deposited by a Federal reserve bank with the Federal reserve agent of its district, dollar for dollar for every note it receives.

Fifthly, the notes become "a first and paramount lien on all the assets of the bank." This is what gives the notes their character of asset currency.
It is evident that the notes unite in a manner without example the characteristic of asset bank notes with the characteristics of political paper money.[7] No notes, it will be observed, are issued by or on request of the member banks, but only on request of a Federal reserve bank.

After the notes have been issued, the bank may reduce its liability any day by depositing lawful money with the Federal reserve agent who is right there in the bank.

The Federal reserve banks and the United States Treasury must promptly return to the banks through which they were issued all notes as fast as they are received, and "no Federal reserve bank shall pay out notes issued through another on penalty of a tax of ten per centum." The regulations do not apply to the member banks, but their effect must be to keep notes from circulating long in any district except that for which they were issued.
Sec.5.