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Comment: Regulatory Reform for the Deposit Financial Institutions–Retrospect and Prospects

Published online by Cambridge University Press:  19 October 2009

J. Fred Weston
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Extract

The central theme of the paper by Professor Phillips is the effects of technological change on the way financial institutions operate and the implications for regulation. His analysis is an excellent combination of both sound economics and political economy. Increasingly, shifts are made between noninterest-bearing demand deposits and interestbearing savings deposits. The increased use of negotiable order of withdrawal (NOW) accounts represents a step toward permitting interest on demand deposits. The implications of the increased use of “electronic funds transfer system” (EFTS) are even greater. Professor Phillips indicates the EFTS could make all marketable and negotiable assets “money,” and that the turnover of deposits could approach “infinity.”

Type
Reform of Financial Institutions and Markets: A Progress Evaluation
Information
Journal of Financial and Quantitative Analysis , Volume 9 , Issue 5 , November 1974 , pp. 831 - 833
Copyright
Copyright © School of Business Administration, University of Washington 1974

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References

1 Norton, Frank E. and Jacoby, Neil H., Bank Deposits and Legal Reserve Requirements, (University of California Press, Los Angeles, 1959)Google Scholar. Jacoby, Neil H., “The Structure and Use of Variable Bank Reserve Requirements,” in Banking and Monetary Studies, edited by Carson, Deane, (R. D. Irwin, Inc., 1963), pp. 213–233.Google Scholar