$197,700,000,000 in Deposit Flight Hits US Banks in Three Months As Billions of Dollars Piled Into Money Market Funds: Report

Depositors are pulling billions of {dollars} out of the standard banking system, based on a brand new report from the Federal Deposit Insurance coverage Company (FDIC).

In line with the company’s new quarterly profile, home deposits fell by $197.7 billion within the second quarter of this yr.

That is a decline of 1.1% and a reversal from the primary quarter, when U.S. banks witnessed a $190.7 enhance in deposits.

The deposit flight comes as historic quantities of cash proceed to build up in cash market funds, which lately have provided extremely aggressive charges in comparison with conventional financial institution financial savings accounts.

New figures from Federal Reserve Financial Knowledge (FRED) present that the quantity of capital invested in cash market funds has elevated to greater than $6.54 trillion since June of this yr, a quantity that has elevated each quarter for the reason that finish of 2022.

Cash market funds enable folks to simply achieve publicity to lower-risk, short-term debt securities, together with U.S. Treasury bonds.

Traders started flocking to the funds in 2022, when the Fed started elevating charges aggressively in an effort to quell rising inflation, sending short-term Treasury yields considerably greater.

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