Regulation Q (12 CFR 217) is a Federal Reserve regulation which sets out capital requirements for banks in the United States. The version of Regulation Q current was enacted in 2013.
From 1933 until 2011, an earlier version of Regulation Q imposed various restrictions on the payment of interest on deposit accounts. During that entire period, it prohibited banks from paying interest on demand deposits. From 1933 until 1986 it also imposed maximum rates of interest on various other types of bank deposits, such as savings accounts and NOW accounts. The motivation for the deposit interest restrictions was the perception that the bank failures of the early 1930s, during the first part of the Great Depression, had been caused in part by excessive bank competition for deposit funds, driving down the margin between lending rates and borrowing rates and encouraging overly speculative investment behavior on the part of large banks. A more direct challenge was the creation of NOW accounts, which were structured to effectively be the equivalent of interest-bearing demand deposits but to technically avoid being demand deposits. Congress legalized these for Massachusetts and New Hampshire in 1974, the rest of New England in 1976,
The imposed cap on savings deposit interest rates also encouraged the emergence of alternatives to banks, including money market funds. As a result of these challenges to interest rate ceilings, Congress permitted the creation of new types of flexible-interest bank accounts, including money market accounts as of December 14, 1982. Regulation Q ceilings for savings accounts and all other types of accounts except for demand deposits were phased out during the period 1981–1986 by the Depository Institutions Deregulation and Monetary Control Act of 1980; as of March 31, 1986, all interest rate ceilings had been eliminated except for the ban on demand deposit interest, which was then the only remaining substantive component of Regulation Q.