What it is:
In the finance world, a bank deposit is the placement ofin an account with a bank.
How it works (Example):
In the banking world, there are two general types of deposits: demandand time deposits. Demand are the placement of into an account that allows the depositor to withdraw his or her from the account without warning or with less than seven days' notice. Checking accounts are demand . They allow the depositor to withdraw at any time, and there is no limit to the number of transactions a depositor can have on these accounts (although this does not that the bank cannot charge a fee for each transaction).
A time deposit is an interest-bearing held by a bank or financial institution for a fixed whereby the depositor can only withdraw the after giving notice. Time deposits generally refer to savings accounts or certificates of , and banks and financial institutions usually require 30 days’ notice for withdrawal of these . Individuals and companies often consider as “ ” or readily available even though they are technically not payable on demand. The notice requirement also means that banks may assess a penalty for withdrawal before a specified date. may pay higher interest rates than demand .
Why it Matters:
Bank deposits are a fundamental way liquid assets held by the central bank) calculated by the Federal Reserve. Time below $100,000 are included in the Federal Reserve’s M2 supply measure (M1 plus savings accounts, generally), and time above $100,000 are included in the M3 supply. The Federal Reserve currently does not place reserve requirements on savings and , but the amount of demand an institution has often dictates all or part of the reserves it must keep on hand either in vault or on with the Federal Reserve; the more dollars an institution has in demand , the more dollars it must keep in reserves.moves through an . Some bank deposits at commercial banks (demand ) are part of the M1 supply (a country's physical plus demand and other