Demand deposit

Demand deposit is in banking, the term for bank deposits, in which no maturity or period of notice has been agreed or the term or notice period is less than a month. Normally, the demand deposits. The term comes from deposits which, the creditor on sight - so any time - can have cash withdrawal or by cashless payments without having to show his intention to the deposit-taking institution before.

Legal bases

According to § 1 para 1 No. 1 of the Banking Act, the acceptance of funds as deposits or other repayable funds from the public necessarily regarded as banking services, which may be commercially used only with permission of the Financial Supervisory Authority BaFin. Therefore, banks are only authorized to accept demand deposits.

A legal definition of demand deposits was found in § 3 of the statement of the Deutsche Bundesbank on minimum reserves ( AMR), the sight liabilities mature as daily and the liabilities of credit institutions designated for which a notice period or term of less than one month agreed. This statement has been canceled because of the third stage of Monetary Union by the Bundesbank.

Liquidity Regulation applicable to credit institutions circumscribes now in § 2 para 1 No. 1 LiqV sight deposits as overnight or up to a month overdue in payment obligations. Thereafter, 10 % of demand deposits according to § 4 para 1 No. 2 LiqV are recognized as payment obligations.

Species

The current account is the most common form of demand deposits, because it is payable on demand; the balance of money market accounts are payable on demand. This means that the account holder intended dispositions before the bank does not have to announce and the credit can get unlimited. While checking accounts liquidity and payments motives are important, money market accounts used exclusively for investment. Formal include the dispositions under the " promised performance " savings deposits up to the amount of 2,000 € not to demand deposits, but are part of savings deposits, even if they can be features without notice.

Purpose

Demand deposits are particularly used because of their availability for settlement purposes. Therefore, because of their very unfavorable interest rate or even Unverzinslichkeit they are not suitable for investment; but experience has shown that there remains a certain amount of current accounts, will not have the medium term ( base theory ). Demand deposits reduce cash holdings and thus the risk of loss ( theft, lose, fire).

Importance

About 47 % of the costs incurred in Germany at a point of sale revenues are Bundesbank study found that a cashless. According to the Bundesbank statistics, the demand deposits reached in February 2010, about 37 % of total deposits of non-banks in Germany, the rest were time deposits. In the microeconomic money supply theory (see monetary base ) is the quotient of holding currency and demand deposits attitude is referred to as cash coefficient. He tells us how high the proportion of the circulating cash in comparison to the demand deposits with banks is that could be readily converted into cash through withdrawal. Together with the cash flow form deposits the money supply M1, an important micro-economic indicator used in assessing monetary developments.

Security

Like all bank deposits are also subject to demand deposits with German banks at least the statutory deposit insurance and often beyond the voluntary scheme of individual banking organizations. According to § 4 Paragraph 2 No. 1 of the Deposit Guarantee and Investor Compensation Act ( EAEC ) deposits are insured up to the amount of € 100,000, will be paid in compensation case, if a credit institution in accordance with § 5 EAEC is unable to repay deposits. Deposits within the meaning of the EAEC are ( in simple terms ) deposits with credit institutions which arise in the context of the operations of the institution and are to be repaid from this due to legal or contractual provisions. This includes claims that the institution has securitized by issue of a certificate, but not bearer and order bonds. This provision therefore also demand deposits are recorded. In addition to these statutory deposit insurance exists in the various banking associations an additional, in excess of that amount for deposits. Credit institutions are legally obliged to provide the nature and amount of deposit insurance information when their customers reveal a special interest in the safety of a nominal investment.