The economic and legal significance of “full” deposit availability

Bank deposits have two characteristics: they are available on demand and at par value. Deposit redemptions face, at least given current technology, a lag between when they are requested and when they are delivered. This fact leads some to argue that as a deposit is not fully available, all deposits...

Full description

Saved in:
Bibliographic Details
Published in:European journal of law and economics 2016-02, Vol.41 (1), p.243-254
Main Authors: Bagus, Philipp, Howden, David
Format: Article
Language:English
Subjects:
Analysis
Availability
Bailouts
Bank deposits
Bank reserves
Banking industry
Central banks
Commercial Law
Cost control
Eastern Europe
Economic theory
Economics
Economics and Finance
European Integration
International trade
Law and Economics
Loans
Public Finance
Reserve requirements
Studies
Western Europe
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Bank deposits have two characteristics: they are available on demand and at par value. Deposit redemptions face, at least given current technology, a lag between when they are requested and when they are delivered. This fact leads some to argue that as a deposit is not fully available, all deposits are, in fact, loans and that the legal obligation of the depository changes. We argue that this lag does not nullify the original economic intent of the deposit, and hence, does not alter the legal obligations that a depository faces. Deposits must be held safely to ensure that the depositor′s money will be available when an unforeseen event occurs.
ISSN:0929-1261
1572-9990
1572-9346
DOI:10.1007/s10657-012-9347-y