The United States major banks recently encountered a surge in withdrawals as depositors become increasingly scared of the banking industry's volatility following the controversial collapse of small- to medium-scale banks, such as the Silicon Valley Bank (SVB) and Signature Bank.
According to a report by the Epoch Times, the top 25 U.S. banks lost $89.7 billion in the week ending March 22. These financial institutions received a $67 billion increase in deposits the week before that, but are now down by $22.7 billion since the collapse of SVB.
Peter Earle, an economist at the American Institute for Economic Research, told the independent news outlet that the "recent failure of SVB and Signature Bank, as well as worries about the rest of the banking system (whether justified or not), has contributed to growing credit tightness."
As per the latest seasonally adjusted Federal Reserve figures on deposit outflows, domestically chartered American banks lost roughly $213 billion in deposits as "scared savers" became eager to take out their money between the collapse of SVB on March 10 and March 22. A total of $196.4 billion of the amount came from smaller banks.
During this time, other financial institutions narrowly avoided total collapse with First Republic securing $30 billion in rescue deposits from other banks while international firms such as Credit Suisse also struggled to deal with industry turmoil and got saved by a lifeline offered by the Swiss National Bank.
U.S. regulators believe the surge in withdrawals represents a stabilization in deposit outflows but there's considerable uncertainty as to where things go from here.
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"What's unclear for us is how much of these banking stresses are leading to a widespread credit crunch. That credit crunch … would then slow down the economy. This is something we are monitoring very, very closely," Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, told CBS during an interview on March 26.
Noted economist Mohamed El-Erian wrote in a recent op-ed that if deposit outflow from regional banks continues, this spells trouble. "This could become a big issue for local communities, regions and sectors that fear that their access to loans will be curtailed because their traditional banking partners will have to shrink their balance sheets after losing deposits," he wrote.
Death of cash looms in Australia as top bank ANZ announces halt in withdrawals
Meanwhile, ANZ declared that it will halt facilitating withdrawals and deposits from a number of its Australian branches. One of the "Big Four" banks in Australia, the major financial services company is pushing its customers toward using their automated teller machines (ATM) and deposit machines.
Critics say the change could disproportionately affect older people who are less capable of going digital. Analysts have also suggested it would make fiat users more susceptible to technical issues. The move has also renewed fears of a push to eliminate cash and that cash could soon be replaced by central bank digital currencies (CBDCs).
Twitter user Wall Street Silver said in a post: "The end of cash is near. They are trying to go all digital and then bring in the CBDC to be programmable so they can control how you spend your money. Eventually, they will be able to make your CBDC money expire or disallow certain products." (Related: The death of the Dollar is coming sooner than expected – when it happens expect bank runs and closures, food scarcity, riots, high unemployment, and hyper-inflation.)
In a response to an inquiry made by CoinTelegraph, an ANZ spokesperson said the affected branches are all metropolitan branches that have ATMs and deposit machines nearby and that the move was partially prompted by in-branch transactions decreasing by more than 50 percent over the past four years.
Australia has been moving toward a cashless society, with the percentage of retail payments made with cash falling from 59 percent in 2007 to just 27 percent in 2019, according to a March 16 bulletin from the Reserve Bank of Australia (RBA).
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