Do central banks want further proof ZIRPs or NIRPs do not encourage consumers to spend more than they already do? We saw this in Europe, and now it seems ZIRP is doing the opposite of what the central bankers want in the United States.
According to Federal Deposit Insurance Corporation (FDIC) data, more than $2 trillion in cash has been deposited in accounts of American banks so far this year.
In April alone, deposits spiked by $865 billion, which is more than the previous record for the entire year.
In total, as of June 2020, commercial bank deposits stand at $15.4 trillion.
What banks saw the biggest deposit increases? The usual suspects: JPMorgan Chase, Citigroup, and Bank of America. The smaller firms gained, but not nearly as much as the power players.
Brian Foran, an analyst at Autonomous Research, told CNBC:
“Any way you look at it, this growth has been absolutely extraordinary. Banks are flooded with cash, they’re like Scrooge McDuck swimming in money.”
But now that depositors have shown their hand and willing to put their cash in the banks, these titans of Wall Street really have no incentive to give their customers anything. As a result, banks will most likely decrease their interest rates, which were not even that high to begin!
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