Since the collapse of Silicon Valley Bank (SVB), depositors have moved $500 billion to money market funds and big banks. Deposits are likely to continue to flow out of less safe banks even with the bigger government guarantee, analysts at JPMorgan wrote in a note Wednesday.
Although the Fed and the US Treasury Department have repeatedly emphasised that the US banking system is still sound, a cruel fact is that small and medium-sized banks are experiencing wild capital outflows.
US banking system has lost about $500 billion since SVB collapse. Depositors have pulled money out of smaller banks and into safer havens like money market funds and bigger ones.