People have moved $500 billion into money-market funds and major banks since SVB imploded. JPMorgan offers 3 reasons why the shift will continue.
Deposits could continue moving out of less secure banks, even with bigger guarantees from the government, JPMorgan analysts wrote in a note published Wednesday.
"An FDIC guarantee of all US bank deposits would certainly help, but it might not be enough to completely stop this deposit shift," JPMorgan said. "While money market funds are not guaranteed, they invest in the safest and most liquid instruments," the analysts wrote."In other words, not only are money market funds offering superior yields, but they also look safer than bank uninsured deposits."policies to remove money out of the economy have gradually eroded liquidity in banking, they added.
To be sure, an FDIC guarantee of all US bank deposits would help ease fears about the $7 trillion that's currently uninsured.
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