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February 1979

Automatic Transfers and the Money Supply Process

by John A. Tatom and Richard W. Lang

Since November 1, 1978, commercial banks have been permitted to offer a new type of individual savings account from which funds are transferred automatically into a checking account. This automatic transfer service (ATS) enables individual customers to earn interest on funds which previously would have been held in their checking accounts. The use of these new ATS accounts affects the payments system and the money supply process.