The banking winter hitting the United States has not gone unnoticed. Customers of major US banks have been caught off guard and have withdrawn $60 billion. According to a recent Financial Times report, depositors are looking for more profitable and secure alternatives.
Billions of dollars are fleeing the big banks!
The first quarter was rough for U.S. banks. Bank failures have multiplied, prompting consumers to flee even banks that have not yet displayed irregularity.
According to a report recent report of the Financial Timesnear 60 billion dollars were withdrawn from the main American banks.
Massive withdrawals of money from U.S. banks were particularly large at :
- Charles Schwab, 41 billion withdrawn;
- State Street, 12 billion withdrawn and a 5% decline in deposits;
- M&T Bank with more than $4 billion withdrawn and a 3% decline in deposits.
The report also notes that the collapse of the Silicon Valley Bank (SVB), the Silvergate Bank and other lenders accelerated these massive withdrawals of money from American banks.
Interest rate key to massive cash withdrawals
The report Financial Times states that consumers have withdrawn their funds from U.S. banks because of the low interest rates offered.
Customers preferred to put their money in more options such as money market funds or treasury bills which offer a higher yield.
The average annual interest rate for savings accounts in the United States is currently 0.24 percent, while short-term Treasury bills offer a yield of over 5 percent. This rate is consistent with the benchmark rates of the Federal Reservewhich range from 4.75% to 5%.
Indeed, the Financial Times points out that the Federal Reserve’s tight monetary policy has also contributed to the massive withdrawal of customers.
Recall that the Silicon Valley Bank lost $1.8 billion due to the Federal Reserve’s rate hike. This case shows that traditional markets are vulnerable to the decisions of financial authorities. This should encourage people to consider cryptocurrencies as a less risky alternative to the traditional financial sector, which is often under the sway of Politics.
Coming from a journalism university background, I came across Bitcoin and cryptocurrencies not long ago.
The potential of the Blockchain seduced me and I made it my research topic.