Brazil’s moves last week to stem the rise of its currency reflect the growing anxiety in many emerging economies about inflows of hot money. Fickle deposits in banks – ancient enablers of calamitous booms and busts in credit – deserve even wider attention. It is time to prohibit all banks – and depository institutions like money market funds – from paying more than the risk-free government bill rate. In short, we need to cap rates on all short-term deposits.

This might seem an unthinkable throwback. In the US interest rate ceilings were supposedly consigned to history along with the regulation of trucks and airlines – swept away by innovative money market funds and the deregulatory tide of the late 1970s and 1980s. Banks were forced, says the folklore, to pay market rates to long-exploited depositors, instead of giving away free toasters to attract custom.

In fact deregulating rates on deposits was more like eliminating the inspection of truck brakes than freeing truck tariffs. Bankers had long feared that competing for deposits by paying high interest rates triggered races to the bottom in lending, while yield-chasing depositors were seen as a dangerous source of funds. Banks in good condition, the head of the Philadelphia National Bank said in 1884, did not pay interest to depositors.