–Asks Impact Of Reg Q Repeal on S-T Fundng Mkts,Dep Institns Bal-Sheets
–Repeal Would Be Effective From July 21, 2011
WASHINGTON (MNI) – Following is the text of an announcement
Wednesday by the Federal Reserve, proposing a repeal of Regulation Q,
which prohibits payments on demand deposits such as those held in
checking accounts, effective July 21, 2011:
The Federal Reserve Board on Wednesday requested comment on a
proposed rule to repeal the Board’s Regulation Q, which prohibits the
payment of interest on demand deposits by institutions that are member
banks of the Federal Reserve System.
The proposed rule would implement Section 627 of the Dodd-Frank
Wall Street Reform and Consumer Protection Act, which repeals Section
19(i) of the Federal Reserve Act in its entirety effective July 21,
2011. The repeal of that section of the Federal Reserve Act on that date
eliminates the statutory authority under which the Board established
Regulation Q. The proposed rule would also repeal the Board’s published
interpretation of Regulation Q and would remove references to Regulation
Q found in the Board’s other regulations, interpretations, and
commentary.
The Board is seeking comment on whether the repeal of Regulation Q
is expected to have implications for balance sheets and income of
depository institutions, short-term funding markets such as overnight
federal funds market, the demand for interest-bearing demand deposits,
and competitive burden on smaller depository institutions.
Comments on the proposal must be submitted within 30 days from the
date of publication in the Federal Register, which is expected shortly.
** Market News International Washington Bureau: 202-371-2121 **
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