The Federal Reserve's two-week-old policy of charging fees for overdrafts that arise during the business day in reserve accounts appears to be working as intended, a Fed official said Monday at a funds transfer conference.

The fees were adopted by the Fed on April 14 to give banks an incentive to reduce their so-called "daylight" overdrafts, which had risen from average daily peaks of $80 billion in 1985 for the reserve system, to average daily peaks of $150 billion last year.

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