The Federal Deposit Insurance Corporation (FDIC) has just issued an appeal for US savers to leave their money in their bank accounts. The message follows hints of a bank run as coronavirus-induced panic continues to spread.
Recent global events have created an air of uncertainty that has not been seen since at least the 2008 financial crisis. With global markets in meltdown, layoffs and outright sackings rising, and still no vaccine for the coronavirus, people are getting increasingly nervous.
According to reports, there is a growing fear that bank customers might start rushing to withdraw as much of their money as possible. Already some banks have experienced higher than average demands for cash [The Wall Street Journal].
FDIC Tries to Calm US Bank Users
As reported last week, the FDIC, Office of the Comptroller of the Currency, and the Federal Reserve all recently updated their coronavirus advice. The new documents urge US citizens to remain calm as well as to to keep faith in the banking system and the insurance that the FDIC provides [CNN Business].
The FDIC posted another plea to Twitter asking US bank users to not attempt to withdraw all their money from their accounts. After describing the current times as “unprecedented,” FDIC Chair Jelena McWilliams stated the following:
“Your money is safe at the banks. The last thing you should be doing is pulling your money out of the banks now thinking that it’s going to be safe someplace else.”
She adds that the FDIC has not lost a single penny from funds held in insured deposits over the course of its existence. The FDIC was founded in 1933.
“If you’re talking about having your money in a safe place, please keep it in an FDIC insured bank.”
Forget the mattress! Keeping large sums of cash at home is risky. The best place to protect your money is in an FDIC-insured bank where it’s safe and sound. Learn how the FDIC safeguards your #money at https://t.co/O2cb1bTUJs pic.twitter.com/R8pFVxBPrM
— FDIC Gov (@FDICgov) March 24, 2020
Keep Your Dollars in a Bank so it Can Devalue Them and Lend Them Out?
The FDIC pleas come on the back of a host of creative banking policy changes at the Federal Reserve and other central banks around the world of late. Many have slashed interest rates and pledged to stimulate growth through quantitative easing while the Fed has even made it so banks no longer need hold any amount of their assets as part of their reserves.
Set within this backdrop, it’s not hard to see why people might be scrambling to withdraw their bank balances. It remains to be seen, however, if the recent efforts to calm bank users described above will be successful.
The plethora of different stimulus strategies coming out of the likes of the Federal Reserve in recent weeks seem to be also sparking interest in assets with more predictable monetary policy. After a dramatic selloff earlier this month, both the price of gold and Bitcoin are rising once again.
As BeInCrypto reported earlier today, the gains seem to coincide with the news of massive liquidity injections and other radical banking policies breaking. Mike Novogratz, long-time Bitcoin proponent and CEO of Galaxy Digital, believes both assets have a lot more upside potential going forward too.