4 ms·

You can't lend demand deposit, but you can lend time deposit.

• princeb 11y ago
  won't be surprised if affected banks started selling deposit swaps if this comes to pass. would be pretty interesting if cash funds picked this up so that the everyday man can have a little bit of exposure to what is the bread and butter of the bank as we know it. actually this probably won't affect much. it just means the capital requirements is increased. a bank may not necessarily choose to utilize its deposits before any other source. a bank can happily lend deposits and borrow on the overnight all at the same time to finance day to day operations.