And he produced $100 million a year by obtaining interest on overnight deposits of city funds.

Overnight deposits have been at unusually high since August 2011, and hit several record highs in recent weeks.

The Fed lowered the federal funds rate, which financial institutions charge each other for overnight deposits, from 5.5.

Instead, they jacked up interest rates as high as 300 percent for overnight deposits.

United States banks often fund themselves with overnight deposits from foreign banks, and vice versa.

Yes, there it was: a lovely, lovely overnight deposit.

Data from the ECB just released shows that overnight deposits at the central bank are at another high of €455.3bn.

This account is similar to overnight deposits with the French Treasury: it may bear interest and may, in special circumstances, post a negative balance.

They are hoarding cash to an unprecedented extent - having placed a record 502bn euros on overnight deposit at the European Central Bank.

The overnight deposits figure has been hitting record levels in recent weeks, ever since the ECB pumped almost €500bn of cheap loans into the system.

The same goes for the banking sector, which according to the latest data has a record €464bn of money on overnight deposit with the European Central Bank.

The ECB reported this morning that it accepted€493.2bn in overnight deposits from European banks on Friday evening.

Essentially, the funds are just unsecured obligations of the bank, and therefore are paid the highest interest rate offered by the bank to overnight deposit borrowings.

- Overnight deposits at the ECB have soared to €482bn, adding to fears of a new European credit crunch as banks hoard cash.

What is commonly referred to as the interest rate in the media is generally the rate offered on overnight deposits by the Central Bank or other authority, annualized.

Reuters says overnight deposits tend to rise towards the end of the month-long reserves maintenance period, a period during which banks must maintain a certain level of reserves.

In a sign of how wary banks are of lending to each other, commercial lenders' overnight deposits at the European Central Bank hit a new record high of €453bn.

The steps ranged from barring city and state funds from overnight deposits in Swiss banks to eventually selling off the stock of Swiss companies held by pension funds.

Twitter: Robert Peston - Today's rise in ECB overnight deposits to new record probably reflects halving of reserve requirements, that frees up cash.

In New York the first step is most likely to be the rejection of bids for overnight deposits of surplus Government money, followed by banning the banks from underwriting Government bonds.

Simon Ward from Henderson Global Investors said "narrow" M1 money - which includes cash and overnight deposits, and signals short-term spending plans - shows an alarming split between North and South.

The euro fell sharply to almost €1.29 against the dollar, the lowest since January, as markets digested news that eurozone banks had parked a record €452bn in overnight deposits at the ECB for safe-keeping on Tuesday.

Overnight Deposits The Treasury tax and loan program includes deposits by businesses of employee income tax withholding payments, which are placed temporarily at hundreds of institutions and sit overnight without any interest being paid to the Treasury.

Barring Swiss banks from bidding on overnight deposits, which average more than $2 billion just for the city, would be the first step, followed in stages by barring other business, canceling existing contracts and selling all stocks in Swiss companies.

However, they tend to fit in a fixed order: the least risky instruments, such as Treasury bonds, yield the least, then safe and "guaranteed" instruments like long-term deposits, then overnight deposits, and so on to the various municipal bond and corporate bonds.