A specialized inventory problem in banks
Subtitle: optimizing retail sweeps
By: by Suresh K. Nair and Richard G. Anderson.
Contributors: Anderson, Richard G.; Federal Reserve Bank of St. Louis.
Series: Working paper ;; 2005-023A; Working paper (Federal Reserve Bank of St. Louis : Online) ;; 2005-023A.
Publisher: Federal Reserve Bank of St. Louis
Published: 2005
Place of publication: [St. Louis, Mo.]
Language: eng
Format: Electronic resource
Subjects: Bank reserves -- United States.
Description: "Deposits held at Federal Reserve Banks are an essential input to the business activity of most depository institutions in the United States.  Managing these deposits is an important and complex inventory problem, for two reasons.  First, Federal Reserve regulations require that depository institutions hold certain amounts of such deposits at the Federal Reserve Banks to satisfy statutory reserve requirements against customers' transaction accounts (demand deposits and other checkable deposits).  Second, some inventory of such deposits is essential for banks to operate one of their core lines of business: furnishing payment services to households and firms.  including wire transfers, ACH payments, and check clearing settlement.  Because the Federal Reserve does not pay interest on such deposits used to satisfy statutory reserve requirements, banks seek to minimize their inventory of such deposits.  In 1994, the banking industry introduced a new inventory management tool for such deposits, the retail deposit sweep program, which avoids the statutory requirement by reclassifying transaction deposits as savings deposits.  In this analysis, we examine two algorithms for operating such sweeps programs within the limits of Federal Reserve regulations"--Federal Reserve Bank of St. Louis web site.
Notes: Includes bibliographical references.
Title from PDF file as viewed on 7/22/2005.
Also available in print.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.