How Are Bank Holidays Actually Decided? The Surprising Process Behind Those Days Off

Hello everyone, I am your dedicated public holiday assistant. Recently, a little friend consulted me about the title of how bank holidays are decided. Now I will summarize the relevant problems, hoping to help the little friends who want to know.

Alright, so you’ve probably woken up one morning, grabbed your coffee, and realized the bank is closed. Or maybe you looked at your calendar and saw a random Monday off — and you wondered, who exactly decides this stuff? Is it the President? Congress? Some mysterious holiday council? Let’s break it down in plain English.

First off, when people say “bank holidays,” they’re usually talking about federal holidays in the United States. These are days when most government offices, post offices, and yes, banks, shut their doors. But not every day off is a bank holiday, and the decision-making process is more layered than you might think.

In the U.S., the power to declare a federal holiday lies with Congress. That’s right — it’s a legislative thing. Congress passes a law, the President signs it, and boom — the holiday becomes official. For example, Presidents’ Day used to be just George Washington’s birthday, but Congress shifted it to the third Monday in February with the Uniform Monday Holiday Act of 1968. That’s why so many holidays now fall on Mondays — to give workers three-day weekends.

But wait, there’s more: not all bank holidays are federal. Some are state-level. For instance, Texas observes Texas Independence Day (March 2) as a state holiday, but banks there might close while banks in New York stay open. And then you’ve got “observed” holidays — if a holiday falls on a Saturday, the previous Friday might be observed as the official day off. That’s decided by the Office of Personnel Management (OPM) for federal employees, and private banks often follow suit.

Now, what about holidays that aren’t enshrined in law? Like Good Friday — it’s not a federal holiday, but many banks, especially in the Northeast, close for it anyway. That’s because individual banks or state banking associations can decide to shut down for cultural or religious reasons. Same with New Year’s Eve — not a federal holiday, but many banks close early.

Internationally, it’s a different ballgame. In the UK, bank holidays are set by royal proclamation or legislation — the Bank Holidays Act of 1871 started it all. The government can also declare extra holidays for special occasions, like the Queen’s Diamond Jubilee. But in the U.S., it’s Congress that typically drives the train.

So, how does a new holiday get added? Someone has to propose a bill in Congress. The bill goes through committees, hearings, and votes in the House and Senate. If it passes, the President signs it. It doesn’t happen often — the last new federal holiday was Juneteenth in 2021. Before that, Martin Luther King Jr. Day in 1983. So yeah, it’s a big deal.

And there’s also the role of the Federal Reserve. Since the Fed closes its payment system on federal holidays, most banks have to close too, even if they wanted to stay open. So the Fed’s holiday schedule basically dictates the national rhythm of banking.

Questions related to how bank holidays are decided

You might be wondering: “Can a state decide its own bank holidays?” Absolutely. States can add holidays for their own residents. For example, West Virginia has West Virginia Day (June 20) as a state bank holiday. Also, what about emergencies? The President can declare a national day of mourning, but that’s not a recurring bank holiday — it’s a one-time closure out of respect. And if you’re self-employed? Well, you decide your own holidays, but banks still follow the federal schedule, so plan your deposits accordingly.

Another common question: “Why do banks close on holidays that aren’t federal, like Columbus Day?” Actually, Columbus Day is a federal holiday — it’s observed on the second Monday in October. But some states don’t recognize it, so banks in those states might stay open. It’s a patchwork quilt of rules. Bottom line: check your bank’s local schedule.

To sum it up: federal holidays are decided by Congress, signed by the President, and then enforced by the Federal Reserve. State holidays are decided by state legislatures. And extra closures — like for severe weather or local events — are up to individual banks. So the next time you see a “Closed for Holiday” sign, you’ll know it took a whole chain of decisions to get you that day off.

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