special deposit

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special deposit


special deposit

an instrument of MONETARY POLICY involving the placement of a specified proportion of the banking sector's liquid assets with the CENTRAL BANK as a means of controlling the MONEY SUPPLY. Special deposits are excluded from the bank's liquidity or RESERVE-ASSET RATIO. Thus, if the monetary authorities wish to reduce the money supply they can call for a special deposit. This will lower the liquidity base of the banking sector. As a result, banks will be forced to reduce their lending, leading to a multiple contraction of bank deposits and, hence, a fall in the money supply

In the UK the BANK OF ENGLAND has occasionally called for special deposits and for ‘supplementary special deposits’ (referred to as the corset) to counteract sudden increases in banking sector liquidity.


References in periodicals archive ?
Guinigundo added said the BSP is also exploring the idea of another special deposit window-one between the current short- and long-term TDF.
M-2013-021, which constrained access of trust accounts to the BSP's special deposit account (SDA) facility.
The interest rates on term RRPs, RPs and special deposit accounts (SDA) were also kept steady.
BSP officials said they have been more prudent in handling its expenses, especially as it has reduced interest costs it is paying for maintaining banks' placements in special deposit accounts and other open market facilities.
The bank also kept the rate on its short-term special deposit accounts (SDA) steady at 2.
Summary: The Philippines has tightened rules on capital inflows by prohibiting foreign funds from investing in the central bank's special deposit accounts, governor Amando Tetangco said on Saturday, after the peso surged to a four-year high.
SBI is also offering two special deposit schemes, with higher rates than their next slab of maturity.
At the recently concluded rate-setting meeting of the Monetary Board, the seven-man MB once again kept the overnight reverse repurchase rate at 3 percent, while also keeping steady the interest rate on overnight lending and the special deposit windows.
The Monetary Board likewise kept the interest rates on term RRPs, RPs and special deposit accounts (SDA) and the reserve requirement ratios, according to Tetangco.
The rate that the bank pays lenders for overnight deposits is at 4 percent, and the rate for special deposit accounts remains at 2.

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