Definition of edge act

banking legislation, passed in 1919, which allows national banks to conduct foreign lending operations through federal or state chartered subsidiaries, called Edge Act corporations. Such corporations can be chartered by other states and are allowed, unlike domestic banks, to own banks in foreign countries and to invest in foreign commercial and industrial firms. The act also permitted the federal reserve system to set reserve requirements on foreign banks that do business in America. Edge Act corporations benefited further from the 1978 International Banking Act, which instructs the Fed to strike any regulations putting American banks at a disadvantage compared with U.S. operations of foreign banks.