However, when central banks pay interest on reserves or a deposit facility, this interest rate is rarely the one used to set the target for short-term private sector borrowing rates.
It is the refinancing rate that usually dictates average money market interest rates with the deposit facility rate acting as a lower floor.
He said the ECB was "technically ready" to take the interest rate on its deposit facility into negative territory - in other words, to charge banks to park their cash with the central bank.
The most the ECB has done to try and encourage more lending is cut its overnight deposit rate, in other words paying less interest on money it borrows from banks overnight.
China announced its interest rate cut for both interbank lending and deposit rates to 6.31% and 3.25%, respectively, effective Friday.
Eurodollar futures and options, where investors hedged or speculated on the interest rate paid on a 90-day deposit of a dollar overseas, were half of the Merc's business, with 1.5 million contracts traded per day.
Borrowers can lower their interest rate by asking lenders to purchase certificates of deposit against their loan for rates of 4.25% or below, and credit unions guarantee the CDs.
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Well, interest rate baring checking accounts currently pay out an average interest rate of .08 percent, according to the Federal Deposit Insurance Corp.
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The authority said buyers would own the entire property and have access to a range of financial products at a lower rate of interest than is normally available for a 5% deposit.
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On the first, Harald Benink of Maastricht University and George Benston of Emory University told the conference that deposit guarantees should be explicitly confined to accounts paying a relatively low rate of interest, and that these insured deposits should be more than fully backed by safe liquid assets (such as treasury bills and commercial paper).
The same is true of certificates of deposit: They include heavy penalties, which at first glance seem to outweigh the slightly higher interest rate they offer over a typical savings account.
Efforts this year to curb liquidity and a surging economy including four interest-rate rises and seven increases in the amount of money commercial banks must deposit at the central bank have shown few results.
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The central government has gradually been giving financial institutions more freedom to set interest rates, but the major remaining hurdle allowing banks to determine what deposit rate to offer customers could well be the most difficult.
These pay roughly the same interest rate as the money-market accounts it previously used, but offer the benefit of federal deposit insurance.
That was on the deposit rate, the rate put on money left by commercial banks at the central bank, which it normally earns interest on.
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