Deposits Bank An

Deposits Bank An

Deposits (Bank), an entry in the of a bank stating that customers have claims of given amounts against it.

Deposits in joint-stock banks may be of two kinds: demand deposits (or current account balances), which are repayable in cash on demand, and time deposits (savings deposits, or deposit account balances), which require notice of withdrawal, normally seven days. The economic importance of commercial bank deposits is twofold. First, subject to the requirements of prudence and control by the monetary authorities, the volume of deposits may be varied at will by the banks simply by acquiring assets. Second, demand deposits, being transferable by cheque and encashable on demand, are just as much money as are notes and coin.

Deposits in the Bank of England are of four kinds. (1)Public deposits the balance of the main accounts of the British Government (including the Exchequer, the National Commissioners, Savings Banks, etc.). These deposits are in some ways like the deposits of private individuals with joint-stock banks, and reflect the role of the Bank of England as the Government bank. (z) Bankers' deposits the balances of joint-stock banks at the Bank of England, which the banks may thaw on by cheques on the Bank. They are regarded by the joint-stock banks as a basic part of the platform of liquid assets on which their pyramid of credit rests: their size thus provides a bell-wether. Other deposits refer to balances of private individuals, foreign Governments and overseas banks with the Bank of England. (4) Special deposits represent joint-stock bank balances temporarily 'frozen' as a measure of restriction by the monetary authorities.

The total volume of bank deposits in the economy depends on a number of factors, some of which may be influenced by the monetary authorities. First, the monetary authorities (the Treasury and the Bank of England) can directly influence the budgetary position of the Government, the structure of the National Debt and thus the pattern of bond prices, interest rates, and the supply of cash and Liquid assets available to the money market. Such action will influence the volume of deposits. Secondly, the joint-stock banks themselves can affect the level of deposits by theft attitude towards advances, their ideas on what constitutes 'satisfactory' ratios of cash and liquid assets to deposits and their willingness to hold bonds. Thirdly, the general public can influence the volume of deposits by its inclination to hold cash, use bank advances and hold bonds. The volume and level of general business activity and the level of prices also affects the volume of deposits, since at times of high activity and prices the demand for money rises.

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