Flight to Money Funds

Silicon Valley Bank’s collapse has caused savers to seek out alternatives, but the shift poses risks to the financial system and the wider economy

It's forcing a rethink about the traditional role lenders have had in the US financial system and the economy — and whether there are just too many of them.

The turmoil has underscored that there are other places people and companies can park their spare cash and get a better interest rate.

For more than a decade, banks had been able to pay rock-bottom rates to depositors. When the Fed slashed interest rates in the financial crisis, it opened a low-rates era that allowed banks to borrow cheaply and earn handsome profits from lending.

Bloomberg 31 mars 2023


Over the past year those in commercial banks have sunk by half a trillion dollars, a fall of nearly 3%. This makes the financial system more fragile, since banks must shrink to repay their deposits. 



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