The Repeal of Regulation Q and its Impact on Commercial Deposit Accounts

Created by J.P. Morgan Treasury Services


What will change with the repeal of Regulation Q?

Regulation Q prohibits banks from paying interest on demand deposit accounts (DDAs). The Dodd-Frank Act has repealed the federal statute that created Regulation Q. With this repeal of Regulation Q, banks will now be allowed to pay interest on U.S. commercial deposits as of July 2011.

Who is impacted by the repeal of Regulation Q and how?

Any organization with cash in the U.S. will benefit from the additional options that will likely be offered in the market.

The repeal of Regulation Q is designed to encourage companies to keep more cash in the bank, thus increasing the liquidity situation of banks in general and of the Federal Reserve in particular. The bill will allow banks to provide hard interest at competitive rates on corporate accounts.

What can you do?

Our advisory solutions team can help you evaluate and execute your cash allocation strategy. Key questions to consider:

  • How can you best balance hard interest payments and expense reduction through compensating balances?
  • Are you on track with your liquidity strategy? Is there more you can do?
  • How will the coming changes regarding FDIC insurance on non-interest bearing accounts impact your strategy as you decide between unlimited deposit insurance combined with earnings credit and hard dollar interest?

To learn more about how Chase's solutions can help you,
please contact us or call your Commercial Banker.