The Narrow Bank proposed a structure like this, where they would take deposits from customers and just park them at the fed, passing along the fed rate minus a

The Narrow Bank proposed a structure like this, where they would take deposits from customers and just park them at the fed, passing along the fed rate minus a small cut. This is more or less perfectly safe: the Fed basically defines what a US dollar is, and cannot be insolvent. But the Fed won't let TNB open an account. The basic reason seems to be that they worry that this model is destructive to the US economy, which relies on banks making loans so people can buy houses and cars, and businesses can operate. If everyone banked at a narrow bank, the economy would seize up from lack of capital. Whether or not you agree with this take, the reality today is that you cannot run a bank like you've described in the US. (This is all covered in more detail by Matt Levine: https://www.bloomberg.com/opinion/articles/2019-03-08/the-fed-versus-the-narrow-bank#xj4y7vzkg https://www.bloomberg.com/opinion/articles/2019-03-08/the-fe...)