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Regulation Q (E4, E5)<br />The ceiling to the rate of interest US COMMERCIAL BANKS could pay on deposits of less than thirty days' maturity in the period 1933-85. This maximum rate was fixed from time to time by the US FEDERAL RESERVE SYSTEM. One of the aims of the regulation was to reduce the cost of housing finance as THRIFTS would be able to operate with low interest rates. As the regulation was evaded by bankers borrowing abroad to replace domestic deposits, the growth of the EURODOLLAR market was encouraged and much ms!NTERMED!AT!ON occurred. In 1980, it was decided to phase out the regulation over a five-year period.
Y= C+I + (X -M)
<strong>MASFAP</strong> – Missouri Association of Student Financial Aid Personnel. May be found on the world wide web at
www.masfap.org.
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