Despite falls over the past year, banks' funding costs remain close to 130 basis points higher than before the onset of the global financial crisis, the Reserve Bank of Australia said in its quarterly Bulletin."Banks experienced a fall in overall funding costs over the past year, reversing a trend of increases since the onset of the GFC," the RBA said."The absolute levels of banks' funding costs and lending rates fell over the past year, while spreads between these rates and the cash rate have narrowed marginally." The RBA said: "The decline in these spreads largely reflects the shifts in the composition of banks' funding liabilities and the narrowing of wholesale debt spreads."The cost of deposits fell, with "a shift in funding toward slightly cheaper sources." A decline in term deposit spreads "was offset by increased spreads in other products, notably transaction accounts. "Changes in the deposit funding mix contributed five basis points to the overall fall in banks' funding costs relative to the cash rate, as funding shifted from relatively expensive term deposits to other accounts,"  the RBA said.It noted that "the fall in the overall cost of deposits was in sharp contrast to the years immediately following the global financial crisis, where deposit market developments were often a key driver of the increase in banks' funding costs."Changes in the overall cost of wholesale funding contributed about four basis points to the fall in the major banks' cost of funding relative to the cash rate, it said, with the spread on new issuance now around its lowest level since 2009.In considering other sources of funding, the Reserve Bank observed that issuance of covered bonds had been "subdued" over the past year, despite having a lower cost of funding than unsecured bonds.It concluded that, as Australian banks' covered bond issuances are capped at 8 per cent of their domestic assets, the sector was holding back some capacity in the event of "heightened stress in global financial markets".In contrast, over the past year the demand for residential mortgage-backed securities continued to recover, the RBA said.The Bank also noted the emergence of "notice of withdrawal" accounts (generally requiring a minimum of 31 days' notice).  These accounts are "driven by regulatory developments", the RBA said, adding that the advertised interest rates for these accounts were similar to those paid for bonus saver accounts and some term deposit 'specials'.