Paper rediscounted at the Federal Reserve bank should not be assumed to be only that discounted by the member bank; in fact, in the past the banks have regularly used Liberty Loans for rediscount purposes. The distinction between bills payable and rediscounts is that under the latter classification the notes are discounted to maturity by the Reserve bank, and the interest for the full time of the interest bearing notes is added to the face. For example: Assume that loans with a face amount of $15,000, with interest to maturity for $300, are rediscounted with Reserve bank. The entries which should be made are as follows:

In these illustrations it was assumed that credit was desired by the member bank in its reserve account, but a member bank may take Federal Reserve notes instead of book credit if it desires.