Otherwise the reduced IOER rate would result in a substantial increase in total bank deposits, along with a correspond, further increase in bank lending. Bank reserves are the minimal amounts of cash that banks must keep on hand in case of unexpected demand. I have several accounts that I have my automatic bill pays come from and other accounts for taxes. The source of interest bearing deposits is non interest bearing deposits directly or indirectly via the currency route (never more than a short-term seasonal variation), or through the bank's undivided profits accounts. However, with China and Russia no longer actively adding to their gold reserves, this year’s totals are expanding at a slower pace, O’Connell pointed out. Currently, depositors have to maintain adequate checking account balances to cover all of their regular payments. The more savings account rates drop now, the sadder the plan gets. Contact This will not help very many! REUTERS/Leah Millis And they paid interest rates that got them the same spread compared to loan rates as we get on savings accounts now. 6. Rates won't mean a thing if the banking system collapses. I think you will see this demonstrated (unless this change is really temp). The FIs need to make a buck and a buck there to stay in business, have you ever thought of that?By being able to loan what use to be reserves FIs will make substantially more...WatsonI can't decide if this is good or bad news. Free overdraft transfer policies (like A possible negative impact from this Reg D change is that it could put more downward pressure on savings account rates, especially at online banks that offer both low-interest checking accounts and high-interest savings accounts. And the IOER = 0 equilibrium shown here assumes that the Fed "mops up" the excess reserves that banks no longer wish to hold, so as to prevent any further increase in total bank deposits. This is the sole cause of Alvin Hansen's "secular stagnation" (chronically deficient AD).Glad to see at least a temporary rollback of the Reg D "6 max" limit -- though as your post says, in the end it's really up the the individual FIs (Alliant allows only 6 no matter what... others will allow more for a fee... and one CU by me doesn't seem to care at all). So, they might exploit this new rule, but it is not economic forces pushing them to, it is simply because they can.I hope this will have the effect of raising the monthly dollar limit on withdrawals. At first I thought that “interim final rule” in the press release title implied a temporary change, but after researching the The Committee’s choice of a monetary policy framework is not a short-term choice. The present limit of $250,000 keeps too much idled money in the payment's system. Now the banks and CUs will convert them into semi checking accounts and no interest will be paid. This was done in part to give customers easier access to their funds during the COVID-19 pandemic. I'm going to be watching what happens to my Alliant savings account (currently at 1.35% APY) at the end of this month. The reg allows only 6 per month via online and via phone, then in person as many as you want....resets the next month...so for the fact that in person isnt a viable option.....this is a very good thing.....keep people homeThis change will be total destruction on the savings and MM accounts. By mid-1995 (a deliberate and misguided policy change by Alan Greenspan in order to jump start the economy after the July 1990 –Mar 1991 recession), legal, fractional, reserves (not prudential), ceased to be binding – as increasing levels of vault cash/larger ATM networks, retail deposit sweep programs (c. 1994), fewer applicable deposit classifications (including allocating "low-reserve tranche" and "reservable liabilities exemption amounts" c. 1982) & lower reserve ratios (requirements dropping by 40 percent c. 1990-91), and reserve simplification procedures (c. 2012), combined to remove reserve, and reserve ratio, restrictions.Savings accounts withdrawal limits simply represent the last vestige of the "monetization" of time deposits (from 1961 to 1981). Since this isn't FDIC insured I don't keep a high balance there so I need several savings accounts as well.I hear ya dp1. Alan Greenspan reduced reserve requirements by 40 percent. To avoid overdrafts, many depositors keep a sizable balance in their checking accounts.