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Strategies & Market Trends : Currencies and the Global Capital Markets

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To: Lee who wrote (2056)8/13/1999 10:47:00 PM
From: JF Quinnelly   of 3536
 
"Disintermediation" means the removing of funds from a bank, an S&L, a financial "intermediary". We witnessed disintermediation back when Regulation Q fixed interest rates on bank deposits at 5%, at a time when money market funds would pay you much more. So people pulled their money out of savings and put it in MM funds.

Since banks make loans based upon their deposits, disintermediation has the effect of drying up loans in the banking system.
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