Depositors are withdrawing billions of dollars from the traditional banking system, according to a new report from the Federal Deposit Insurance Corporation (FDIC).
the second quarter of this year, deposits nationwide declined by $19.7 billion, according to the Federal Deposit Insurance Corporation's (FDIC) recently released quarterly bank survey.
This is down 1.1 percent from the first quarter, when U. S. banks recorded deposit growth of $190.7 billion.
the deposit outflow is due to the fact that historic amounts of money continue to be attracted to money market funds. In recent years, money market funds have offered very favorable interest rates compared to traditional bank savings accounts. According to new data released by the U. S. Federal Reserve, as of June of this year, the amount of money invested in money market funds totaled more than $6.54 trillion, a figure that has increased every quarter since the end of 2022.
Money market funds allow people to easily access low-risk, short-term debt securities, including U. S. Treasury bonds.
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