OH. 3
THE ANALYSIS OF BANK-MONEY
37
ence is not exact. In Great Britain the old-fashioneddistinction between deposit-accounts and current-accounts, namely that the former earn interest butthe latter do not, is fast becoming blurred ; for,increasingly, banks allow interest on the average ofa customer’s current-account in excess of an agreedminimum •—- with the result that deposit - accountsand current - accounts are tending to correspond todifferences of banking custom between different parts ofthe country and different classes of customers, ratherthan to the payment or non-payment of interest . 1
There are also—this again is, in Great Britain ,a very common practice — current-accounts whichare held, not because they are necessary as cashfor the convenient transaction of current business,but as a means of remunerating the banker for hisservices. Sometimes a customer may remunerate hisbank by a commission, which is calculated by referenceto the turnover of his account and the trouble he hasgiven in other ways ; but very often the remunerationwill take the form of an agreement by the customer tomaintain a minimum balance on which he will receiveno interest. Since the balances, held in virtue of suchunderstandings, are usually allowed to fall below theagreed minimum on payment of interest on the differ-ence, it is difficult to decide whether to regard themas savings-deposits or as cash-deposits. In whicheverway they are regarded, however, they constitute a
1 Broadly speaking, in London the sharpness of the old distinctionbetween current-accounts and deposit-accounts is, as a rule, preserved.In the provinces, however, there is no uniformity of practice, and thecompetition between the hanks leads to a variety of arrangements. Oneof the commonest is for the bank to allow a rate of interest, somewhat(say } per cent) below the advertised deposit rate, on the average amountof the current-account in excess of an agreed minimum. This means thatit is often not worth while to transfer what are really savings-deposits fromcurrent-account to deposit-account. Thus, short-period savings-depositsare liable to be classified amongst the current-accounts rather than thedeposit-accounts. This is also true of small increments of savings-deposits,which are only transferred at intervals and in larger units to deposit-account.