N
Newboy
Ermmm - they are 'investing' it that's how they earn an average of £60 per account.
Negative interest rates.
- Thread starter ladylola
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How do these two statements marry? I'm genuinely interested and you seem to know.
N
Newboy
An overnight deposit is a (very) short term investment.
A the positive balance of a current account by it's very nature can't be used for a long term investment. The bank has no idea (other than a statistical view) of when the balance may be withdrawn and therefore cannot use the funds.
In fairness, the entire banking system is now based on smoke and mirrors rather than any real solid foundation. The best example being banknotes - originally backed by physical assets they are now, to use the Bank of England's wording, based on trust - you trust that a £10 note will be worth £10 simply because it has £10 written on it.
A the positive balance of a current account by it's very nature can't be used for a long term investment. The bank has no idea (other than a statistical view) of when the balance may be withdrawn and therefore cannot use the funds.
In fairness, the entire banking system is now based on smoke and mirrors rather than any real solid foundation. The best example being banknotes - originally backed by physical assets they are now, to use the Bank of England's wording, based on trust - you trust that a £10 note will be worth £10 simply because it has £10 written on it.
IIRC, councils and the like were "investing" multi-million amounts overnight, in the Icelandic "Banking" system (where they were promised returns of c. 7%)
Presumably, the 7% was p.a., but if you carry out this trick every night, and use millions, it all adds up.
Also, I would not be surprised if banks use (the sum / average / prediction of their) current account holdings for longer-term investments anyway. Otherwise, without a bit of forward prediction, there would effectively be no financial system to speak of.
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The one thing that gets me with the banking system, is when someone pays you by cheque. It can take up to 5 days to "clear" (usually 3 working days, but dependant upon the type of account a person has) In this modern age of computerised systems, there's absolutely no reason for this delay. Apparently it's based on the pre-computer, banking days when a cheque would be physically sent to the originating bank.
Especially as when making a bank transfer over the telephone the money is transferred the same day, usually within an hour or two.
At least that's the service I get from First Direct.
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I thought that it was quiet
Thanks for that link . For me it tends to reinforce the belief that there is a general push towards an electronic cashless ( and physical) society /system.
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