Interest rates under the U.S. national banking system

Bruce Champ, Neil Wallace, Warren E. Weber

Research output: Contribution to journalArticle

6 Citations (Scopus)

Abstract

According to previous studies, the demand-liability feature of national bank notes did not present a problem for note-issuing banks because the nonbank public treated notes and other currency as perfect substitutes. However, that view, when combined with nonbindingness of the collateral restriction against note issue, itself an implication of the fact that some eligible collateral was not used for that purpose, implies that the safe short-term interest rate is pegged at the tax rate on note circulation. Since evidence on short-term interest rates is inconsistent with such a peg, that view must be rejected.

Original languageEnglish (US)
Pages (from-to)343-358
Number of pages16
JournalJournal of Monetary Economics
Volume34
Issue number3
DOIs
StatePublished - Jan 1 1994

Fingerprint

Interest rates
Bank notes
Short-term interest rates
Banking system
Liability
Tax rate
Currency
Substitute

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

Cite this

Champ, Bruce ; Wallace, Neil ; Weber, Warren E. / Interest rates under the U.S. national banking system. In: Journal of Monetary Economics. 1994 ; Vol. 34, No. 3. pp. 343-358.
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Interest rates under the U.S. national banking system. / Champ, Bruce; Wallace, Neil; Weber, Warren E.

In: Journal of Monetary Economics, Vol. 34, No. 3, 01.01.1994, p. 343-358.

Research output: Contribution to journalArticle

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