Negotiable Order of Withdrawal account
Encyclopedia
In the United States
, a Negotiable Order of Withdrawal account (NOW account) is a deposit account
that pays interest, on which checks
may be written.
While a "negotiable order of withdrawal" is essentially identical to a check, US banking regulations define the terms separately and state that an account on which one can draw a "check" cannot pay interest. NOW accounts are structured to comply with Regulation Q
, which until July 2011 prohibited interest on traditional checking accounts.
. As such, they are considered liabilities from the bank's perspective.
The NOW account was developed and put into effect by Ronald Haselton, former President and CEO of the Consumer Savings Bank in Worcester, MA.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, a Negotiable Order of Withdrawal account (NOW account) is a deposit account
Deposit account
A deposit account is a current account, savings account, or other type of bank account, at a banking institution that allows money to be deposited and withdrawn by the account holder. These transactions are recorded on the bank's books, and the resulting balance is recorded as a liability for the...
that pays interest, on which checks
Cheque
A cheque is a document/instrument See the negotiable cow—itself a fictional story—for discussions of cheques written on unusual surfaces. that orders a payment of money from a bank account...
may be written.
While a "negotiable order of withdrawal" is essentially identical to a check, US banking regulations define the terms separately and state that an account on which one can draw a "check" cannot pay interest. NOW accounts are structured to comply with Regulation Q
Regulation Q
Regulation Q is Title 12, part 217 of the United States Code of Federal Regulations. It prohibits banks from paying interest on demand deposits in accordance with Section 11 of the Glass–Steagall Act ....
, which until July 2011 prohibited interest on traditional checking accounts.
History
NOW accounts are considered checkable deposits, and are counted in the Fed's M1 definition of the money supplyMoney supply
In economics, the money supply or money stock, is the total amount of money available in an economy at a specific time. There are several ways to define "money," but standard measures usually include currency in circulation and demand deposits .Money supply data are recorded and published, usually...
. As such, they are considered liabilities from the bank's perspective.
The NOW account was developed and put into effect by Ronald Haselton, former President and CEO of the Consumer Savings Bank in Worcester, MA.
See also
- Money market account
- Canadian Payments AssociationCanadian payments associationThe Canadian Payments Association is a not-for-profit organization that:*operates and maintains national systems for the clearing and settlement of payments and other arrangements for the making or exchange of payments;...
has no such support for this account type.