DOI: 10.26509/frbc-ec-202625 ISSN: 2163-3738

Reciprocal Deposits: An Update

Edward S. Prescott, Grant E. Rosenberger
Reciprocal deposits are deposits exchanged between banks to increase deposit insurance coverage for a depositor. The recently-passed 21st Century ROAD to Housing Act significantly increased the quantity of reciprocal deposits that are not counted as brokered deposits. This Economic Commentary describes the change, how this change increases the deposit insurance limit in practice, and which banks are likely to increase their use of reciprocal deposits as a consequence.

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