Appendix A


As part of the introduction to banking we provide a summary of the product line offered by banks. Not all banks offer all these products, but these instruments are available in virtually every banking market. More detailed information is available in the author’s books The Money Market Handbook, Fixed Income Markets and Bank Asset and Liability Management, all published by John Wiley & Sons (Asia) Pte Ltd.

Interest-bearing and non-interest-bearing current accounts

These are also known as cheque accounts or (in the USA) checking accounts; they are the simplest form of short-term deposit or investment instrument. Customer funds may be withdrawn instantly on demand and banks generally pay interest on surplus balances, although not in all cases. Current accounts are a cheap source of funding for banks, as well as a stable one, but the funds are less valuable from a liquidity metrics point of view because their balances are instant access.

Demand deposits

Also referred to as sight deposits, they are similar to cheque accounts but are always interest bearing. The funds are available on demand, but cannot be used for cheques or other similar payments.

Time deposits

Time or term deposits are interest-bearing deposit accounts of fixed maturity. They are usually offered with a range of maturities ranging from 1 month to 5 years, with longer dated deposits attracting higher interest. This reflects the positive yield curve, which indicates the funding ...

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