According to Bloomberg, U.S regulators have proposed a plan that will disincentivize Wall Street firms on their reliance on volatile short-term funding. In particular lenders would be required to depend on stable funding from sources such as deposits (CDs) , according to a proposal by the FDIC, OCC and Federal Reserve. This new plan proposes that lenders to maintain more longer-term funding such as customer retail deposits.
Considered to be more tougher than the Basel version, as specifies what assets count as the most liquid. Banks in the United States since the financial crisis have kept CDs as low as 0.01%.
With the increase from the Fed in December, some banks increased deposit rates. With the proposed plan , fintech startups, competition for CDs and funding requirements, in 2017 it is likely that deposit demand and fed increases could push up retail rates. In addition potential rates rises could make retail customers leave zero transaction accounts and into deposits again.
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