Transactional accounts such as checking accounts have a relatively high reserve ratio - 9/1. Time-deposit accounts like money markets and CDs are not subject to reserve requirements. What it looks like the Fed and your credit union are doing is trying to boost lending by shifting what they classify transactional and time deposit.
For example: You have $100,000 in your credit union checking account. This enables the credit union to make a $90,000 loan, based on a 9/1 reserve ratio. Don’t worry though, they aren’t actually lending $90,000 out of your $100,000 - the $90,000 is on top of the $100,000 and is brand new money. However, they are limited to a $90,000 loan because the reserve money was in a transactional account. If it were in a time-deposit account the credit union could make loans in a much greater amount.
I have no loans with this CU and am not likely to seek any loans. I also have a Visa ther with zero balance, at an attractive rate. I have a decent amount of money on deposit there.
I can see why the institution would want to do this, but, as a “member,” part owner really, with funds “invested” in this particular institution, wouild you say that the risk to my deposits stays the same, increases or decreases, as a result of these changes?
It’s apparent to me, that the risk increases, with no increase in reward, in my particular situation.