A Bank within a Bank: How a Commercial Bank's Treasury Function Affects the Interest Rates Set for Loans and Deposits
12 Pages Posted: 20 Jun 2015
Date Written: June 18, 2015
Banks determine the interest rates on loans and deposits through an internal pricing approach that seeks to take account of the relevant costs and risks of their business. This article focuses on ‘funds transfer pricing’ (FTP), a key component of banks’ internal pricing methodologies. It discusses issues in some banks’ FTP practices, the impacts of economic and regulatory developments on FTP, and some potential implications for monetary and financial stability.
Suggested Citation: Suggested Citation