Skip to main content

Deposit Times Are Changing

04/22/2024 07:27 pm

By Ray Birch

LAKE FOREST, Ill.— While the U.S. money supply in recent years has appeared to be stable, one economist says that’s not the case, adding that money supply components have been moving as wildly as a theme park ride and affecting deposits at FIs across the country.

“What’s the story?” asked Michael Moebs, economist and chair of Moebs $ervices, whose new study takes a detailed look at money supply components. “Insured transactions have fallen but are at an all-time high since 1914. Insured savings are making a big comeback. And uninsured deposits are soaring with insured deposits. Total money supply is far from stable. It is like a Disney amusement park ride with people looking suspiciously calm after a wild ride where each screamed and yelled as limbs and bodies were thrown around.”

Feature Money Supply

Moebs said Federal Reserve Chair Jerome Powell’s “new definition of money,” announced in the second quarter of 2020, has finally been implemented by financial institutions of all sizes.

“FIs all over are marketing and selling as dollars and accounts are moving to the best deals and highest rates,” he said.

chart

What Happened in 2023

Moebs detailed what happened with money supply in 2023:

  • Regular DDA (no interest) accounts fell slightly, by (1.7%) or about $90 billion, yet are still at their highest levels since 1914 when the Fed starting tracking money
  • Interest paying DDA levels fell (11.5%), the lowest since COVID started in U.S in. January 2020
  • Savings levels dropped dramaticaly (13.9% or $1.5 trillion), and are at their lowest level since COVID started. “In March 2020, when Powell eliminated reserve requirements and monthly transaction restrictions moving savings to M1, the bell started tolling for savings,” Moebs said. “The saver is moving money to DDA since saving rates are less than an average of 25 BPS. Plus, DDA is where stimulus funds came into play and have left about $1 trillion”
  • M2 was left with term-money CDs and retirement accounts (IRAs and Keoghs)
Moebs Mike

Michael Moebs

Additional Changes—And a First

Moebs highlighted the major money supply changes that ocurred last year:

  • Retail CDs had a huge resurgence “after almost dying” during COVID. Retail CDs increased 282% in 2023 and now are over $1 trillion
  • Jumbo CDs surged 46.7% to more than $800 billion

“For the first time since starting in 1962, retirement accounts at depositories dropped (19.3%),” Moebs said. “Why the dramatic shift in money? The answer is rates. Wall Street rates are being offered for all CDs and staying low for IRAs and Keoghs. M3 is money market mutual funds. Rates for MMMFs soared and funds poured in. Dollars mainly came from depositories. The most sensitive was depository retirement deposits.”

Effect on Money Stock

Moebs reiterated that pricing is influencing money stock.

“Gathering funds has gone beyond deposit insurance caps of $250,000. Risk is fundamental to price. Depositories need to adhere to analytical systems such as debit scoring and forego judgemental approaches,” Moebs said. “CDs are returning. Savings are falling. DDA is high. MMMFs on Wall Street are soaring. The signals call for new and different methods for managing deposit portfolios. Info is vital.  Measuring and pricing is essential. Deposit times are changing.”

Comments

Post a Comment

Please no profanity or political comments.

Popular posts from this blog

Syracuse Fire Department Credit Union

Remember, you're not alone with  NCOFCU.org Join/Upgrade Check out some of NCOFCU's additional features: First Responder Credit Union Academy Financial Literacy Podcasts YouTube Mini's Blog Job Board
Post a Comment
Read Complete Article HERE>»

Happy Holidays To All Who Serve

  Happy Holidays To All Who Serve 12/22/2025 10:28 am   By Grant Sheehan and Anthony Hernandez Every year, many Americans celebrate the joy of family and relief from work the holidays bring. Apart from the hustle and bustle, the holiday season is a special time to be with loved ones, engaging in family traditions and rituals, and making memories that will last a lifetime. However, not everyone gets to partake in the holiday gatherings.   There are over a hundred thousand military members serving in harm’s way or in 24-hour command center...
Post a Comment
Read Complete Article HERE>»

Sunday Reading - The gold standard, explained

  Gold Standard       The gold standard, explained A gold standard is a system where a country’s currency is pegged to, and can be converted into, a fixed amount of gold. It’s typically meant to create a sense of security in the country’s currency: When a government uses a gold standard , its currency can be exchanged for an equivalent amount of gold—although regulations around redemption vary by country.   After the Civil War, in 1873, America adopted the gold standard for the first time. At the time, if gold was priced at $100 an ounce, each dollar  rep...
Post a Comment
Read Complete Article HERE>»

Is another housing bubble brewing?

While there have been fears expressed by some of a repeat of the housing bubble that led to the housing crisis just over a decade ago, numerous real estate analysts say they believe the market fundamentals are much stronger now and that the sharp increase in home prices reflects low rates, a lack of inventory, and demographics. To be sure, the market is hot in many markets, with home sellers receiving multiple cash offers, often over the listed price, on homes. Some analysts, including those at Swiss banking giant UBS, have published charts showing how home prices are outstripping both wages and rents, reported USA Today. Home prices have appreciated more than 60% since November 2012, incomes have only appreciated by 20% and rents by 30% over the same time period, the report added. “But unlike the real estate boom that led to the Great Recession, this nationwide price spike is not being fueled by a wholesale collapse in lender ethics,” USA Today reported “There aren't any low-doc o...
Post a Comment
Read Complete Article HERE>»

Next Gen of Payments Could Leave ACH System Behind, Bank CEO Cautions

NEW YORK–The next generation of payments could leave the Automated Clearing House (ACH) system behind as stablecoins and tokenized deposits move into the banking core, according to one bank CEO. Custodia Bank CEO Caitlin Long said during a discussion with TheStreet Roundtable host Scott Melker that the “tokenized dollars are going to be big. Yes, there’s a distinction between tokenized bank deposits and stablecoins. Yes, right now, all the activity is in stablecoins, but we’re going to link the two in a safe and sound way.” During the discussion, Long cited Citi’s upgraded forecast for the sector, which now projects between $3 trillion and $4 trillion in stablecoins outstanding by 2030, according to Yahoo Finance, which noted Long believes even that range is far too conservative. “Those numbers are still too low,” she said. “I think they’re way too low.” According to Long, the innovation lies in embedding blockchain technology directly into the banking infrastructure rath...
Post a Comment
Read Complete Article HERE>»

NAFCU Economist: U.S. Might Dodge Recession

Curt Long said a strong jobs report shows resilience despite the Fed’s escalation in interest rates. By Jim DuPlessis | January 06, 2023 CUTimes Source: Shutterstock. NAFCU Chief Economist Curt Long said Friday the continued strength in the job market has increased the odds the nation will dodge a recession this year. The U.S. Bureau of Labor Statistics reported Friday there were 153.7 million seasonally adjusted jobs in December, an increase of 223,000, or 0.1%, from November and up 3% from a year earlier. The unemployment rate was 3.5% in December, down from 3.6% in November and 3.9% in December 2021. Long said December’s rate was the lowest in more than 50 years, while the labor force participation rate rose slightly. Seasonally adjusted average hourly earnings were $32.82 in December, up 0.3% from November and up 4.6% from a year ago, a slightly lower rate of increase from previous months. Curt Long “This is an unambiguously positiv...
Post a Comment
Read Complete Article HERE>»

NCOFCU is working hard for you! Coalition of CU Groups Sends Letter to Congress on Tax Exemption

Take Action Coalition of CU Groups Sends Letter to Congress on Tax Exemption May 1, 2025 10:15 am No Comments WASHINGTON–A coalition of credit union organizations has sent a joint letter to Congress in support of the credit union tax exemption. As the CU Daily has been regularly reporting, credit unions are especially  concerned this year that Congress might revoke the tax exemption as it seeks ways to pay for expiring provisions of the 2017 tax cuts, which President Trump wants to see renewed. Sending the letter to Congress were the Defense Credit Union Council (DCUC), America’s Credit Unions (ACU), Credit Union Executive Society (CUES), National Association of Credit Union Chairs (NACUC), National Credit Union Management Association (NCUMA), Inclusiv, TruStage, Earnest Consulting Group (ECG), Callahan and Associates, National Council of Firefighter Credit Unions (NCOFCU), Metropolitan Area Credit Union Management Association (MACUMA), Association of Credit Union Audit and Ri...
Post a Comment
Read Complete Article HERE>»

Dolphin Debit & Customized Service Concepts Partner to Expand ATM Options

HOUSTON– Dolphin Debit , a provider of ATM management services, said it is partnering with Customized Service Concepts (CSC), an ATM sales and service provider in New England, to offer financial institutions in the region a complete range of ATM options. Gary Walston The two companies said the advantages the partnership bring to clients are numerous, including the ability to meet any ATM need. Dolphin Debit can provide its ATM outsourcing solutions for CSC clients, allowing credit unions to break free of the burdens of ATM fleet management and maintenance, while CSC expert technicians will provide the service for the joint Dolphin-CSC clients, the organizations said. Customized Service Concepts, LLC, with offices in Durham, Conn., and Goffstown, N.H., has served financial institutions in New England for more than 30 years. CSC provides ATM/ITM solutions as well as a broad product range that inclu...
Post a Comment
Read Complete Article HERE>»

Corporate Assessment Assailed by Industry Trades

Using the NCUA’s midpoint estimates of remaining corporate stabilization costs, CUNA Chief Economist Bill Hampel estimates it would take four more years of assessments similar to the 2012 rate of 9.5 basis points to pay off corporate losses........... Corporate Assessment Assailed by Industry Trades
Post a Comment
Read Complete Article HERE>»

Email and Text Message Etiquette

As we navigate our everyday communications, I want to emphasize the importance of practicing good email and text message etiquette. This enhances clarity and ensures that everyone feels respected and valued in our interactions. Email Etiquette: 1. Use a Clear Subject Line: A subject line that accurately reflects the content of your email will help recipients know what to expect. 2. Greet Appropriately: Start with an appropriate greeting, such as "Dear [Name]", "Hello [Name]," or "Hi [Name], which sets a positive tone. 3. Acknowledge Receipt: If you receive an email that requires a response, action, or information, please acknowledge its receipt. A simple reply confirming that you have received the email helps the sender know their message was received and provides an opportunity to clarify expectations. 4. Be Concise: Keep your emails clear and to the point. Avoid excessive details unless necessary. 5. Professional Language: Use respectful and professional l...
Post a Comment
Read Complete Article HERE>»