Those who do remember history

A fascinating discussion on the effects the gold standard, historical wars, economic development, and other events have had upon modern transaction limitations.

by: Shelbey Neil

“My financial institution stopped paying interest on my money market account because I wrote too many checks. Can they do this?”

One of our artifacts that we request as part of our AffirmX compliance solution services focuses on how institutions monitor and control this particular aspect. Frequently, institutions and customers/members alike wonder why there is a limitation on certain accounts, and how this all came to be.

Why are there such strict regulations?

Whenever this issue comes up, there usually isn’t time to fully explain the history behind the matter, which would go far to explain the “why.” So when I heard the question come up again recently, I resolved to finally write this brief recap of how these regulations came to be. Having a fundamental background can help us understand the nuances of these transaction limitations, which is especially useful in this particular instance, because the nuances are rather significant.

Modern reserve requirements and transaction limitations have been wrought by two major, historical factors—the metal standards and developing reserve requirements.

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