The Beginning of the End? J.P. Morgan Chase & Co. to Charge Fees on Deposits

Guest post by Joe Hoft

Cold Hard Cash

(Google Images)

What economists have feared has now officially begun – a US bank has announced it will begin charging fees on deposits.

According to the Wall Street Journal’s Market Watch,

“J.P. Morgan Chase & Co. is preparing to charge large institutional customers for some deposits, citing new rules that make holding money for the clients too costly, according to a memo reviewed by The Wall Street Journal and people familiar with the plan.”

The article mentions that J.P. Morgan Chase & Co., which is “the largest U.S. bank by assets, is aiming to reduce the affected deposits by billions of dollars… to discourage certain deposits due to new regulations and low interest rates”.

The overall concern is related to the negative impact of negative interest rates. If it is cheaper to hold money rather than pay a bank for holding your cash, individuals will begin to hoard their cash.  This will result in the US Government having to print more money to meet the need for cold hard cash.  This in turn may lead to a run on the bank or hyperinflation or any number of unintended consequences – only time will tell but most scenarios are not good.  The uncertainty of what this means is what may impact the markets the most.

Comments

As a privately owned web site, we reserve the right to edit or remove comments that contain spam, advertising, vulgarity, threats of violence, racism, anti-Semitism, or personal/abusive attacks on other users. The same applies to trolling, the use of multiple aliases, or just generally being a jerk. Enforcement of this policy is at the sole discretion of the site administrators and repeat offenders may be blocked or permanently banned without warning