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Reciprocal Deposits and the Banking Turmoil of 2023

Author

Listed:
  • Edward Simpson Prescott
  • Grant Rosenberger

Abstract

Reciprocal deposits are deposits exchanged between banks to effectively increase deposit insurance coverage. Their use grew significantly during the banking turmoil of 2023. This Economic Commentary describes what they are, their connection to brokered deposits, how their legal treatment has changed over time, and which banks use them the most. It also discusses longer-run trends in uninsured deposits.

Suggested Citation

  • Edward Simpson Prescott & Grant Rosenberger, 2024. "Reciprocal Deposits and the Banking Turmoil of 2023," Economic Commentary, Federal Reserve Bank of Cleveland, vol. 2024(14), pages 1-12, August.
    • Handle: RePEc:fip:fedcec:98661
    DOI: 10.26509/frbc-ec-202414
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    References listed on IDEAS

    as
    1. Shaffer, Sherrill, 2012. "Reciprocal brokered deposits and bank risk," Economics Letters, Elsevier, vol. 117(2), pages 383-385.
    2. Sherrill Shaffer, 2013. "Reciprocal deposits and incremental bank risk," Applied Economics, Taylor & Francis Journals, vol. 45(34), pages 4857-4860, December.
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