The meaning of the word “deposit” is quite broad. It is used in various fields - both economic and non-economic. First, we will talk about the former, and then about the latter. But first, let’s give a definition.
The word “escrow” is a term that has a Latin origin. Translated, it means "I lay," "leave." Deposit is a term that is used to refer to the storage process as a whole.
Several meanings of the word
It has several meanings. One of the most common is the safe storage of valuables and documents (in a general sense). Another important issue is the procedure for depositing various international agreements. In the latter sense, escrow is a term that is used in international law.
Deposit in international law
It represents the implementation of the relevant procedure through the diplomatic missions of the state in the country where the storage of this document is supposed. It should be noted that the deposit of a particular category can be carried out only upon conclusion of a special protocol. It must be signed by the depository and representative of the depositing state.
Types of deposits in the economy
Currently, several of its species stand out. We list the main ones. It:
- deposit of valuables;
- storage of works of art;
- cash deposit (salary or other income).
In addition, the following varieties are distinguished:
- global deposit (this is when shares or assets are transferred for storage by a banking institution to another bank, while there is no right to partially withdraw them);
- administrative, when shares or assets are deposited with a bank that acts as an agent of a stock broker or client.
It should be noted that there are also numbered deposits. In this case, the name of the client transferring the valuables to the bank institution is hidden. Instead, a special number is used.
Contractual agreement
It should be noted that in any form, escrow is an organized process carried out through the preparation of the necessary documents in accordance with clearly defined rules. The contractual agreement serves to confirm the transfer of any value to storage. The place and conditions of the deposit depend on what is the subject of the contract. Moreover, both individuals and legal entities can act as parties.
Cash deposit
The most common type is cash deposit. It involves the transfer of funds to a banking institution in deposit. There are two options for their storage: on demand and urgent. They differ only in terms and conditions and the time period for withdrawing funds. The depositor deposits a certain amount into a special deposit account. After that, the credit organization provides him with a document called a certificate of deposit. This document confirms the fact of depositing funds.
Demand deposits
If the deposit was made on demand, the depositor has the opportunity to withdraw funds at any time. It is only necessary to present to the bank employee the above document (certificate of deposit). At the same time, the interest that has been accrued during the storage period is not lost.The funds that the bank received from the depositor are stored either on a checking account or on a current account. Usually they are used to pay the population current expenses or make settlements between different organizations.
Urgent deposit
Urgent deposit of the amount of funds implies transferring them for storage to a particular credit institution for a specified period. The parties agree this time in advance. It is indicated in the contractual agreement. It should be noted that when making a cash deposit of this type, interest is accrued higher. Urgency allows banks to plan with sufficient accuracy how these funds can be used in their circulation. That is why the rates on such accounts are higher. In addition, urgent accounts are characterized by lower maintenance costs, which also affects the amount of remuneration received by the investor. However, if the client decides to withdraw funds ahead of time, interest on them is lost.
In some countries (for example, in the United States) urgent certificates of deposit are widespread. They can be freely transferred to dealers of a particular credit institution or investors with a loss of interest.
In the event that several customers decide to jointly transfer documents or other values to a banking institution, there is such a type of deposit as joint.
Bank cell
In the narrow sense, depositing funds with banks means storing them in a special cell. At the same time, a credit organization cannot use them in the form of client investments. Accordingly, the latter does not accrue interest. The cell provides a guarantee of security when making important transactions.
Exrow mechanism
This mechanism is used to secure a transaction between two parties. These are mainly settlements on securities that are drawn up when buying and selling real estate. The ex-agent is an independent person. It implements the agreement during the transaction between the two parties. Bank escrow is currently a popular form of exrow mechanism. It involves the reservation of a certain amount of funds in a bank cell (in some cases, on a special escrow account). In case of bank deposit in this case, a tripartite agreement is drawn up.
Only if all the requirements have been met by the seller, he can withdraw the funds due to him. The banking institution is obligated to return the money to the buyer if, for one reason or another, the seller could not comply with all the conditions of the contract.
The object of deposit may be documents, securities and non-cash funds. In Europe and the USA, this practice is especially common.
Deposits of required reserves
Banks are the main financial intermediaries operating in the economy. They are the channel through which changes that have occurred on money market turn into changes in the commodity market. Banks are financial intermediaries. On the one hand, they accept deposits (i.e. deposits), thereby attracting funds from depositors. On the other hand, they provide these funds to economic agents (households, firms) at a certain percentage. In other words, they give out loans.
So, commercial banks accept valuables from customers for storage. However, they themselves transfer them to a mandatory deposit to the Central Bank. This is necessary in order to ensure liquidity regulation of the entire banking system.
How is the deposit rate established? In resolving this issue, the Bank of Russia proceeds from how it is necessary to influence the size and structure of the money supply in the state. The latter includes funds of the population and bank reserves. The latter determine the ability of the banking system to create deposits, and public funds are the main offer of money.
When reserves are deposited, the Bank of Russia does not accrue interest on them. These funds are returned if the credit institution is liquidated or declared bankrupt. In the event that the reserve requirements are not met, the Bank of Russia may deduct them from correspondent account broke the law of a credit institution. In this case, the deposit of money is carried out in an indisputable manner. The amount of unpaid funds is transferred to the Bank of Russia account. In addition, a fine is charged in court from a credit institution. Its size is set by the Bank of Russia.
What is a deposit ratio?
It demonstrates how funds are distributed between cash and deposits. This ratio is calculated as the ratio of cash to the total amount of all available deposits. It should be noted that the credit indicator of the state economy will be the lower, the higher the required reserves ratio and the higher the corresponding ratio.
If we talk about the deposit as a whole, outside of its relationship to the economic sphere, we can distinguish several more of its types. We’ll talk about them now.
Deposit of documents
This type of deposit is the placement in the global information network of a document in electronic form. It is implemented so that people can get free access to information on a non-profit basis. Typically, this term applies to peer-reviewed journals that post electronic copies of speeches at conferences or articles. It is also often applied to reports presented in repositories or other generally accessible archives in order to increase the frequency of citation and use, as well as the overall availability of these documents.
Escrow is one of the two main methods for providing free access. The second is free publication in various journals that are in the public domain. This deposit is sometimes referred to as "green." And a publication posted in this way is called the "golden path" to gaining free access. About 91% of all peer-reviewed journals provide support for authors who deposit copies of their work.
Deposit of scientific papers
It is carried out by decision of the editorial and publishing or academic council of universities, research institutes, editorial and publishing councils of editorial boards and publishers of collections and magazines. The decision made by them becomes valid after the head of the organization approves it.
The work becomes deposited after its abstract and bibliographic description are published in the index "Information Culture". It should be noted that the average publication period is from four to five months. This method of publication is used by teachers, graduate students, students and other specialists working in the field of culture. Scientific works that have passed the deposit procedure are equated with publications. They are taken into account when defending doctoral and master's theses.
It should be noted that the authors retain the rights that arise from copyright laws, but they do not claim to receive royalties. In all universities of the country, specialized research institutes, information services on art and culture, which collaborate with national, regional, regional scientific libraries, there are rules for processing and the procedure for submitting documents to be deposited. At the request of the author, based on the results of the procedure, he is provided with a special certificate about this operation.
