USA – Customers withdraw money from small banks – Economy

After the collapse of Silicon Valley Bank (SVB) two weeks ago, account holders have made massive withdrawals of money from small US banks in the past week. According to US Federal Reserve data, total deposits fell to $5.46 trillion from $5.58 trillion previously. This was the largest weekly decline to date in absolute terms and the largest percentage drop in 16 years. Small banks are those financial institutions that are not among the 25 largest US banks. However, at the same time, these institutes have stockpiled larger amounts of cash by taking out loans—obviously to be able to service account withdrawals. At major banks, deposits rose to $10.74 trillion from $10.67 trillion earlier in the week. US President Joe Biden has proposed increasing deposit insurance in the US beyond the current figure of $250,000. This may become possible if instability increases in the sector, he says on a visit to Canada. However, US banks are doing very well. It may take some time for the situation to calm down.