Another gamble is Indonesian short-term deposits, yielding about 33% even after a 76% devaluation.
Traditionally, commercial banks used short-term deposits to finance relatively short-term working capital.
As a result, one source of profit, taking short-term deposits and lending the money for longer at higher rates, has dried up.
Local institutions offered rates of over 50% a year for short-term time deposits.
American Express earns a net interest income on the spread between the rate it earns from un-loaned amounts sitting in bank deposits and short-term investments in financial securities and the rates at which it extends credit to card members.
At stake are trades in eurodollar futures--bets on short-term interest rates affecting American dollar deposits outside the U.S.--accounting for 53% of the Merc's overall volume.
Under this rule, if short-term market rates went up, deposits would be withdrawn from banks and thrifts and put in the money market.
As a practical matter, Moscow's ability to attract interbank deposits, renew short-term credit lines and secure Western loans has been sharply curtailed by the Soviet Union's non-creditworthy status and its massive arrearages to Western firms.
Deposits are still too short-term to allow banks to finance many property loans of 15 years or more, and finance is still too expensive for the mass of poor Brazilians who need it most.
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In addition, regulators have unveiled all sorts of programs to backstop the short-term lending markets, money market funds, bank deposits and bank debt.
It will have all the insured deposits and the FDIC-guaranteed short-term debt as liabilities.
For savers, this means regular bank deposits, money-market funds and short-term Treasurys effectively lose them money each year.
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