Non-interest Bearing Accounts

HL Deb 08 July 1998 vol 591 cc141-2WA

Lord Sudeley

asked Her Majesty's Government:

Further to the Written Answer by the Lord McIntosh of Haringey on 1 June (WA 8–9), what is the evidence that any attempt to reverse the trend from agents holding a smaller proportion of their assets in non-interest bearing accounts would place a burden on consumers and firms. [HL2534]

Lord McIntosh of Haringey

The increased preference of agents for holding assets in interest-bearing accounts largely reflects reduced costs of transfer between interest bearing and non-interest bearing money. Agents are now able to earn interest on their assets while forfeiting less liquidity than in the past.

If agents were forced to increase the proportion of their assets held in non-interest bearing accounts, this would mean losing interest earned on balances formerly held in interest-bearing accounts.