Federal Reserve Approves Rule Allowing Banks to Pay Interest on Demand-Deposit Accounts
Beginning July 21, 2011, financial institutions that are members of the Federal Reserve System are able to pay interest on demand deposits. The change is a result of a final rule approved by the Federal Reserve Board, which prohibits member banks from paying interest on checking accounts and other demand-deposit accounts.
The rule implements a provision of the Dodd-Frank Act repealing section 19(i) of the Federal Reserve Act. The repeal of that section of the Federal Reserve Act also "eliminates the statutory authority under which the Board established Regulation Q," said the Fed in a July 14 statement.
July 21, 2011