Answer:
It is part of the government's attempt to control the economy by controlling the money supply. One of the economic effects money has is based on how frequently it changes hands. Basically, the government is saying to banks that they have to keep a certain amount of cash in reserve (either on deposit with the Fed or in vault cash). This amount is based on the volume of transaction accounts the bank has (accounts where money is going to be changing hands frequently). If a bank is wanting to classify an account as a savings account instead of a transaction account, and thereby have to keep less cash on hand, the government wants to make sure that the money in that savings account is not changing hands at the same pace as money in the transaction account.
[Editors Note:As of 7/2/09, the separate limit of three per month for checks, POS debit card transactions, etc., has been eliminated, and those transactions are now only subject to the 6/month limit that applies to other restricted transfers and withdrawals.]
First published on BankersOnline.com 7/31/06
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