In this case, a bank makes a deposit at a fixed rate for a given period, and the balance on its
sight deposit account is reduced by a corresponding amount during that period.
To what extent the exchange rate will depreciate as a result of a reduction in the
sight deposit rate depends on several factors.
By providing and absorbing liquidity by means of fixed-rate loans and deposits (see separate box for definition), Norges Bank ensures that at the end of each day the banking system has
sight deposits of the order of NOK 5-12 billion in Norges Bank.
The proportion of total deposits by the non-banking sector accounted for by
sight deposits approached 70%.
A strong increase in KD deposits, propelled by a sizeable gain in
sight deposits, was behind the increase in private resident deposits.
Gains in dinar saving and
sight deposits were partly offset by a decline in dinar time deposits.
In local currency deposits, time deposits declined KD 241 million while
sight deposits were up KD 157 million.
In December, resident deposits were up slightly (+KWD 25 million) exclusively in local currency accounts and mostly in
sight deposits. Resident deposits were up eight per cent in 2011 (+KWD 2 billion) mostly in shorter term deposits.
assets fell KD 155 million in July, with time and
sight deposits at CBK
The third limitation of the current experience is that, partly for the reasons just mentioned plus the prevalent tiering system, negative rates have not been transmitted to retail
sight deposits in any of the five jurisdictions with negative policy rates.
This development reflects a significant rise in
sight deposits among banks and a recovery in April of certificates of deposit and banknotes and coins in circulation.
The largest decline came from KD
sight deposits, down KD 451 million, though savings and foreign currency deposits were also lower.
