Regulation Q is a
United States governmentregulation that put a limit on the interest rates that banks could pay, including a rate of zero on demand deposits ( checking accounts). The imposed zero rate on demand deposits encouraged the emergence of money marketfunds and the growth of substitutes for and alternatives to banks. Regulation Q ceilings for savings accountswere for the most part phased out in the early 1980s by the Monetary Control Act of 1980. Regulation Q was put in place by the Glass-Steagall Actof 1933. The key provision of Regulation Q that remains is that banks under Regulation Q cannot pay interest on checking accounts.
Banks also found a variety of ways to get around Regulation Q restrictions and compete for deposits. These include creating
Negotiable Order of Withdrawal accounts and money market accounts which are not considered checking accounts.
Regulation D was modified to include portions of Regulation Q, which governed (among other things) the type of entities that may own/maintain interest bearing NOW accounts. Regulation Q no longer exists as it once did; all aspects of the regulation are now part of Regulation D.
* [http://www.investorwords.com/4145/Regulation_Q.html Regulation Q Definition]
* [http://www.clevelandfed.org/Research/Glossary/reguq.htm FRB Cleveland - Glossary of Economic Terms]
* [http://www.cato.org/pubs/policy_report/v21n2/friedman.html March/April 1999 - The Business Community's Suicidal Impulse]
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