MMDA, nonreservable account

Doing some research here, found some terms of interest...

1. Non-interest bearing demand deposit account
2. MMDA, money market deposit account...

Banks pay taxes if their reserve requirements are higher then what is prescribed. Say they receive a bunch of cash deposits one day, which bumps their reserves up to 15%, instead of the prescribed 10%. They pay tax on the difference. This is done to put the banks in line and keep control from the top. Either way, the banks found a way to avoid the tax, every 24 hours, they move the excess money into a MMDA, which in essence allows them to cover the 5% interest bearing account and swap it into a non-interest bearing one. They just report to the board the accounts are MMDAs and offer those MMDAs up for loans to other banks in need of reserves, which in turn will pay interest. The interesting thing is these MMDAs are nonreservable, they are noninterest bearing to the depositor. I'm wandering if you can request your account to be an MMDA? The MMDA can't be counted as a reserve used toward fractional lending...

Every time I see non-interest bearing, I see nonreservable. Either way...

http://www.google.com/url?sa=t&rct=j...R3gt0g&cad=rja

This is an exact model of non-endorsement by the suitor, as a micro-state bank.

The banks move the account to non-interest bearing.


This is a great Find! Thank you!