Board of Governors of the Federal Reserve System (U.S.), 1935- and Federal Reserve Board, 1914-1935. "February 1986," Federal Reserve Bulletin (February 1986). https://fraser.stlouisfed.org/title/62/item/20765, accessed on March 3, 2025.

Title: February 1986

Date: February 1986
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image-container-2 from September to December. Over the same period, Ml was also expected to ex- pand at an annual rate of around 6 percent, but in light of its very rapid growth in the third quarter, slower growth in this aggre- gate would be acceptable. Somewhat great- er reserve restraint might, and somewhat lesser restraint would, be acceptable de- pending on the behavior of the monetary aggregates over the intermeeting period and taking account of appraisals of the strength of the business expansion, the performance of the dollar on foreign exchange markets, progress against inflation, and conditions in domestic and international credit markets. The members agreed that the intermeeting range for the federal funds rate, which provides a mechanism for initiating consul- tation of the Committee when its bound- aries are persistently exceeded, should be left unchanged at 6 to 10 percent. 134 ANNOUNCEMENTS Amendment to Regulation D involving changes in reserve requirements. Proposed amendments to Regulations D and Q to preserve the current treatment of MMDAs and to maintain penalties, in cer- tain circumstances, for early withdrawal of time deposits. Proposed interpretation of Regulation G with regard to debt securities issued by a shell corporation that is used as an acquisi- tion vehicle. Proposed changes to the official staff com- mentary on Regulations E (Electronic Fund Transfers) and Z (Truth in Lending). Changes in Board staff. Admission of five state banks to member- ship in the Federal Reserve System. 137 LEGAL DEVELOPMENTS Various bank holding company, bank ser- vice corporation, and bank merger orders; and pending cases. AI FINANCIAL AND BUSINESS STATISTICS A3 Domestic Financial Statistics A44 Domestic Nonfinancial Statistics A53 International Statistics A69 GUIDE TO TABULAR PRESENTATION, STATISTICAL RELEASES, AND SPECIAL TABLES A70 BOARD OF GOVERNORS AND STAFF A72 FEDERAL OPEN MARKET COMMITTEE AND STAFF; ADVISORY COUNCILS A74 FEDERAL RESERVE BOARD PUBLICATIONS All INDEX TO STATISTICAL TABLES A19 FEDERAL RESERVE BANKS, BRANCHES, AND OFFICES A80 MAP OF FEDERAL RESERVE SYSTEM
image-container-3 The Use of Cash and Transaction Accounts by American Families This article was prepared by Robert B. Avery, Gregory E. Elliehausen, Arthur B. Kennickell, and Paul A. Spindt of the Board's Division of Research and Statistics, with the assistance of Garland DeMarco and Julia Springer. The payments mechanism plays a central role in supporting economic activity in the United States. The means of payment in the U.S. mone- tary system are principally cash—currency and coin—and several categories of checkable depos- its at financial institutions. Although very good quantitative data are available on these means of payment, major gaps exist in the knowledge of how these quantities are acquired and used in the economy. Also, the role of credit cards in con- sumer expenditures and their relationship to oth- er means of payment is not well understood. Recent changes in technology and regulation have afforded households significant opportuni- ties to change the methods they use to pay for expenditures. For example, money market de- posit accounts with market interest rates and limited check-writing features did not exist until December 1982. The use of electronic payments methods and automated teller machines also has grown very rapidly in the past five years. Under- standing these changes is important for several reasons. First, the linkages between monetary aggregates and the overall level of economic activity are key factors in determining the weight that should be placed on these aggregates in the conduct of policy. These linkages are likely to be sensitive to the methods households use for making payments. Second, despite a decade of financial deregulation, some restrictions still re- main on accounts at depository institutions. De- termining the effects of these restrictions re- NOTE. The data from the Survey of Currency and Transac- tion Account Usage are available on request from the Nation- al Technical Information Service, 5285 Port Royal Rd., Springfield, Virginia 22161. quires knowledge of how account holders use accounts and of how their behavior might be affected by further regulatory changes. The Board of Governors of the Federal Re- serve System commissioned the Survey of Cur- rency and Transaction Account Usage to under- stand better how cash and other means of payment are acquired and used. The survey, which was conducted between May and August 1984, focused on the household sector of the U.S. economy. It collected information on the payment practices of families, on the rate of expenditure out of deposit accounts with trans- action features, on the use of credit cards, and on the acquisition and patterns of use of cash. In this article we first describe the survey design and initial preparation of the raw data. Next we present findings on the distribution of expenditures of selected demographic groups by method of payment and on the distribution of total payments by the means of payment used. Then we discuss survey evidence bearing on the use of cash, its rate of circulation, and the demographic determinants of cash holdings. Fi- nally, we summarize our findings. THE SURVEY The questionnaire for the Survey of Currency and Transaction Account Usage contains two principal lines of inquiry. The first documents activity for the preceding month in the main checking account of families and in their other checking, money market, and savings accounts. The questions request information on (1) the number and dollar amount of deposits, (2) the number of withdrawals, (3) the number and dol- lar amount of cash deposits and withdrawals, (4) the dollar amount of transfers between accounts, and (5) the dollar amount of investments and large expenditures from accounts. Respondents
image-container-4 88 Federal Reserve Bulletin • February 1986 were encouraged to consult records. Answers to these questions are used to determine the month- ly cash use of families and their rates of expendi- ture out of accounts with transaction features. The second line of inquiry focuses on the cash inventories of individual respondents. For the last time they obtained cash and for their typical cash acquisition patterns, respondents were asked (1) the dollar amount of cash obtained, (2) the balance on hand just before the acquisition, and (3) the time between cash acquisitions. Re- spondents were also asked about the rate at which they spent cash since the last time it was acquired. The survey, which elicited information on several standard demographic characteristics of the families, also asked several questions 1. Cash includes money orders and is used by 100 percent of each family group. 2. Checks include personal checks, bank checks, automatic pay- ments, and electronic payments. about other types of transactions—such as credit card use and electronic fund transfer services. Between May and August 1984 a total of 1,946 telephone interviews were obtained from a ran- domly selected sample of 2,500 families residing in the United States. The respondent was either the head of the family or a financially knowledge- able spouse. Appendix A gives a brief descrip- tion of the survey sample design. The selection and interviewing of the respondents and the coding and preliminary editing of the data were performed by the Survey Research Center at the University of Michigan. The results tabulated here, which are based on an edited and imputed version of the data using sampling weights de- scribed in appendix B, are primarily one-way 3. Here and in succeeding tables, Hispanics are counted separately from other Caucasians. 1. Distribution of total expenditures of families with selected characteristics, by method of payment, 1984 Family characteristic Propor- tion of all fam- ilies (per- cent) Cash' Credit card Check 2 Family characteristic Propor- tion of all fam- ilies (per- cent) Mean monthly expendi- ture (dol- lars) Mean share of total ex- pendi- tures Families using this method (percent) Mean monthly expendi- ture (dol- lars) Mean share of total ex- pendi- tures Families using this method (percent) Mean monthly expendi- ture (dol- lars) Mean share of total ex- pendi- tures Income (dollars) Less than 10,000 24 210 53 17 20 3 62 423 44 10,000-19,999 23 408 40 45 78 6 80 885 54 20,000-29,999 19 541 32 59 154 6 92 1,582 61 30,000-49,999 21 663 29 72 210 8 93 2,418 63 50,000 or more 13 847 18 88 618 10 96 5,355 72 Age of head (years) Less than 35 30 486 40 53 159 6 80 1,383 54 35-44 18 569 31 62 218 7 89 2,454 63 45-54 16 649 37 59 216 7 83 2,368 56 55-64 18 465 38 51 211 8 80 1,823 54 65 or more 17 313 34 33 85 4 84 1,284 62 Race or national origin of head Caucasian 3 82 512 32 56 198 7 88 2,002 61 Nonwhite or Hispanic 18 414 55 34 73 4 60 875 41 Education of head Less than 12 years 21 397 53 22 51 3 63 777 44 High school diploma 33 473 40 44 83 4 81 1,386 56 Some college 19 453 30 59 159 6 91 1,920 64 College degree 27 621 24 79 391 10 94 2,986 65 Location Urban 53 457 40 49 145 6 79 1,558 55 Suburban 23 646 30 71 332 10 89 2,4% 60 Rural 24 432 36 40 92 4 84 1,663 60 Marital and work status of head Unmarried In labor force 15 219 44 24 44 4 70 778 53 Not in labor force 23 386 38 50 155 7 79 1,384 54 Married Neither spouse in labor force 10 354 42 38 93 6 77 1,228 52 One spouse in labor force 22 640 37 59 199 6 84 2,202 57 Both spouses in labor force 29 662 29 66 269 7 93 2,545 64 All families 100 494 36 52 175 6 83 1,798 57
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Date: February 1986
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