Negotiable Order of Withdrawal account


Negotiable Order of Withdrawal account

In the United States, a Negotiable Order of Withdrawal account (NOW account) is a deposit account that pays interest, on which checks may be written.[1]

While a "negotiable order of withdrawal" is essentially identical to a check, US banking regulations define the terms separately and state that an account on which one can draw a "check" cannot pay interest. NOW accounts are structured to comply with Regulation Q, which until July 2011 prohibited interest on traditional checking accounts.

History

NOW accounts are considered checkable deposits, and are counted in the Fed's M1 definition of the money supply. As such, they are considered liabilities from the bank's perspective.[1]

The NOW account was developed and put into effect by Ronald Haselton, former President and CEO of the Consumer Savings Bank in Worcester, MA.[2]

See also

References

  1. ^ a b Mishkin, Frederic S. (2007). The Economics of Money, Banking, and Financial Markets (Alternate Edition). Boston: Addison Wesley. p. 220. ISBN 0-321-42177-9. 
  2. ^ [1], BUSINESS PEOPLE; Haselton Brothers' Role In Banking Innovations, NY Times Article



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