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Selected Deposits and the OBFR

Author

Listed:
  • Alyssa Cambron
  • Marco Cipriani
  • Joshua Jones
  • Romen Mookerjee
  • Scott Sherman
  • Brett Solimine
  • Timothy Wessel

Abstract

The Federal Reserve Bank of New York recently decided to revise the composition of the Overnight Bank Funding Rate (OBFR), a reference rate measuring the cost banks face to borrow overnight in unsecured U.S. dollar-denominated money markets. Specifically, in addition to the federal funds and Eurodollar transactions currently comprising the OBFR, the OBFR now also includes overnight, interest-bearing demand deposits (at rates negotiated between the counterparties and excluding deposits payable on demand) booked within banks? U.S. offices, known as ?selected deposits.? In this post, we discuss the change in more detail, the reason for including selected deposits, and the likely impact on the OBFR?s published values.

Suggested Citation

  • Alyssa Cambron & Marco Cipriani & Joshua Jones & Romen Mookerjee & Scott Sherman & Brett Solimine & Timothy Wessel, 2019. "Selected Deposits and the OBFR," Liberty Street Economics 20190506, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:87329
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    Keywords

    OBFR; Selected Deposits;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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