RSM230H1 Chapter Notes - Chapter 17: Federal Home Loan Banks, Federal Reserve System, Savings Account

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Document Summary

Chapter 17 banking and the management of financial institutions. A bank acquires funds by issuing (selling) liabilities, such as deposits, which are the sources of funds the bank uses. Checkable deposits are bank accounts that allow the owner of the account to write checks to third parties. Checkable deposits include all accounts on which checks can be drawn: non-interest-bearing checking accounts (demand deposits), interest-bearing now (negotiable order of withdrawal) accounts, and money market deposit accounts (mmdas)/ Checkable deposits and money market deposit accounts are payable on demand; that is, if a depositor shows up at the bank and requests payment by making a withdrawal, the bank must pay the depositor immediately. Nontransaction deposits are the primary source of bank funds. Owners cannot write checks on non-transaction deposits, but the interest rates paid on these deposits are usually higher than those on checkable deposits.

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