Banks Fearing Liquidity Crunch Pay More to Cling to Cash

Banks are offering higher payouts to secure their cash reserves from further depreciation and to shield against potential future runs on deposits, as stated by Bank of America Corp.

Both large and small financial entities have been taking these measures even before the upheaval in the U.S. banking system in March, as observed by strategists Mark Cabana and Katie Craig.

Data indicates that substantial time deposits, specifically certificates of deposit issued in sums exceeding $100,000, have surged by approximately $675 billion since the commencement of the Federal Reserve’s balance sheet reduction in June 2022.

Over the past 18 months, as the central bank initiated a series of interest rate hikes, cash has been steadily exiting the banking system in pursuit of higher-yield alternatives, Bloomberg reported.

READ MORE: https://finance.yahoo.com/news/banks-fearing-liquidity-crunch-pay-175714260.html

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