8 Comments
User's avatar
Dimitris Valatsas's avatar

The difference being the deposit account is a tool of monetary policy so price matters, whereas required reserves are mandatory and thus inelastic. Which makes today’s move a bank levy, if one were to put it kindly.

Expand full comment
Meyrick Chapman's avatar

It's irrelevant.

Expand full comment
PROTECT & SURVIVE's avatar

Nice - I have a warm comfortable feeling! :-O

Expand full comment
Dimitris Valatsas's avatar

Totally bizarre announcement. It must have something to do with the P&L...

Expand full comment
Meyrick Chapman's avatar

Hold that feeling for as long as you are able.

Expand full comment
Meyrick Chapman's avatar

Possibly - though it'll make virtually no difference to losses. Monetary income is 'pooled' including negative income. As Buba and BdF hold the lion's share of Deposit Account holdings paying the majority of the IOR they benefit (relatively) by transfers from other members. But Current Account holdings are more-or-less inconsequentially low compared to Deposit Account.

Expand full comment
TheGodfatherBaritone's avatar

Is the basic point that the 25bps increase in one reserve facility is partially offset by the 0% interest of another? Hence, “disingenuous”

Expand full comment
Meyrick Chapman's avatar

No, disingenuous because they say they have made the change to save interest costs, but the savings are more than offset by raising rates on the remunerated reserves.

Expand full comment