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All these people shocked by the risk inherent in their large deposits — it wouldn’t hurt for there to be somewhere you actually can rest cash securely, for a se

All these people shocked by the risk inherent in their large deposits — it wouldn’t hurt for there to be somewhere you actually can rest cash securely, for a service fee. You could imagine a federal institution for this, or simply a regulatory program that required banks to offer such an account. The only reason there’s risk on uninsured deposits is because banks are allowed to place their own bets with the money in exchange for holding it.

pgwhalen 4y ago
> it wouldn’t hurt for there to be somewhere you actually can rest cash securely, for a service fee. This is called a Narrow Bank. [0] The Fed doesn't want it though, because such a bank would not participate in the money creation process, or help the Fed disseminate its monetary policy, which all banks implicitly do. Alternatively... > You could imagine a federal institution for this, or simply a regulatory program that required banks to offer such an account. This is called a CBDC. [1] It may one day happen. [0] https://www.bloomberg.com/opinion/articles/2019-03-08/the-fed-versus-the-narrow-bank https://www.bloomberg.com/opinion/articles/2019-03-08/the-fe... [1] https://www.federalreserve.gov/central-bank-digital-currency.htm https://www.federalreserve.gov/central-bank-digital-currency...
- lowkey 4y ago
  [0] https://archive.is/WEuO8 https://archive.is/WEuO8
deleted 4y ago
[deleted]
mschuster91 4y ago
> it wouldn’t hurt for there to be somewhere you actually can rest cash securely, for a service fee. If you're large enough to have your own bank - many car manufacturers are, IIRC also IKEA - and are in Europe, you can already do this and deposit money at the ECB. In fact, so many were interested in that service that it turned from the usual - banks get paid interest, but a low rate - to the negative as a consequence of all the QE money injected after 2008ff. If you're not large enough, park your money into a time spread of government bonds - the US and Germany are among the safest harbors you can get. Spread your yearly cash burn over 5-10 different banks, buy 1 year bonds and roll them over with the rest.
- helsinkiandrew 4y ago
  > Spread your yearly cash burn over 5-10 different banks, buy 1 year bonds and roll them over with the rest. That’s almost what SVB did, but they got hit by an “unexpected cash burn”. 1 year government bonds may be at low risk of default but there’s a high risk of interest rates and market conditions changing in that time. If you suddenly need the money in 6 months and interest rates have changed, you’ve lost money. You’d need to buy monthly bills to be truly safe and then have the cost of rolling them over every month. Ironically SVB offers a product that can help you do that: https://www.svb.com/liquidity-management/deposits-and-investments/svb-cash-sweep https://www.svb.com/liquidity-management/deposits-and-invest...
- TMWNN 4y ago
  >If you're large enough to have your own bank - many car manufacturers are, IIRC also IKEA - and are in Europe, you can already do this and deposit money at the ECB. In fact, so many were interested in that service that it turned from the usual - banks get paid interest, but a low rate - to the negative as a consequence of all the QE money injected after 2008ff. Didn't ordinary banks offer negative interest rates too? Or was it just the ECB?
anon84873628 4y ago
Isn't this what the various US Treasury money market funds are for?
- pishpash 4y ago
  What I was going to say. Turns out these are safer than banks. In fact why do people use banks at all if they don't need branch services?
eli 4y ago
you can do this now with https://www.intrafi.com/ https://www.intrafi.com/ - they federate your money in $250k chunks to as many banks as it takes, but you still access it all through one main bank. I understand it pays respectable interest rates too
- toomuchtodo 4y ago
  The limit is $50M, which should be plenty for any org to meet short term obligations. The rest of your funds can then be in short dated treasuries, which are risk free.
  - eli 4y ago
    Pretty sure it goes above 50.
    - toomuchtodo 4y ago
      Perhaps my information is inaccurate, that’s the number I was told by a colleague at a financial services firm that just launched their related HYSA sweep product a week ago. Perhaps the limit is defined by each provider? https://en.wikipedia.org/wiki/Certificate_of_Deposit_Account_Registry_Service https://en.wikipedia.org/wiki/Certificate_of_Deposit_Account...
binkHN 4y ago
> ...it wouldn’t hurt for there to be somewhere you actually can rest cash securely, for a service fee. I think this is called a US government short-term bond, and they'll pay you.
- downvotetruth 4y ago
  More a deposit box.
  - cjoelrun 4y ago
    https://www.nytimes.com/2019/07/19/business/safe-deposit-box-theft.html https://www.nytimes.com/2019/07/19/business/safe-deposit-box...

pgwhalen 4y ago

> it wouldn’t hurt for there to be somewhere you actually can rest cash securely, for a service fee. This is called a Narrow Bank. [0] The Fed doesn't want it though, because such a bank would not participate in the money creation process, or help the Fed disseminate its monetary policy, which all banks implicitly do. Alternatively... > You could imagine a federal institution for this, or simply a regulatory program that required banks to offer such an account. This is called a CBDC. [1] It may one day happen. [0] https://www.bloomberg.com/opinion/articles/2019-03-08/the-fed-versus-the-narrow-bank https://www.bloomberg.com/opinion/articles/2019-03-08/the-fe... [1] https://www.federalreserve.gov/central-bank-digital-currency.htm https://www.federalreserve.gov/central-bank-digital-currency...

lowkey 4y ago
[0] https://archive.is/WEuO8 https://archive.is/WEuO8

deleted 4y ago

[deleted]

mschuster91 4y ago

> it wouldn’t hurt for there to be somewhere you actually can rest cash securely, for a service fee. If you're large enough to have your own bank - many car manufacturers are, IIRC also IKEA - and are in Europe, you can already do this and deposit money at the ECB. In fact, so many were interested in that service that it turned from the usual - banks get paid interest, but a low rate - to the negative as a consequence of all the QE money injected after 2008ff. If you're not large enough, park your money into a time spread of government bonds - the US and Germany are among the safest harbors you can get. Spread your yearly cash burn over 5-10 different banks, buy 1 year bonds and roll them over with the rest.

helsinkiandrew 4y ago
> Spread your yearly cash burn over 5-10 different banks, buy 1 year bonds and roll them over with the rest. That’s almost what SVB did, but they got hit by an “unexpected cash burn”. 1 year government bonds may be at low risk of default but there’s a high risk of interest rates and market conditions changing in that time. If you suddenly need the money in 6 months and interest rates have changed, you’ve lost money. You’d need to buy monthly bills to be truly safe and then have the cost of rolling them over every month. Ironically SVB offers a product that can help you do that: https://www.svb.com/liquidity-management/deposits-and-investments/svb-cash-sweep https://www.svb.com/liquidity-management/deposits-and-invest...
TMWNN 4y ago
>If you're large enough to have your own bank - many car manufacturers are, IIRC also IKEA - and are in Europe, you can already do this and deposit money at the ECB. In fact, so many were interested in that service that it turned from the usual - banks get paid interest, but a low rate - to the negative as a consequence of all the QE money injected after 2008ff. Didn't ordinary banks offer negative interest rates too? Or was it just the ECB?

anon84873628 4y ago

Isn't this what the various US Treasury money market funds are for?

pishpash 4y ago
What I was going to say. Turns out these are safer than banks. In fact why do people use banks at all if they don't need branch services?

eli 4y ago

you can do this now with https://www.intrafi.com/ https://www.intrafi.com/ - they federate your money in $250k chunks to as many banks as it takes, but you still access it all through one main bank. I understand it pays respectable interest rates too

toomuchtodo 4y ago
The limit is $50M, which should be plenty for any org to meet short term obligations. The rest of your funds can then be in short dated treasuries, which are risk free.
- eli 4y ago
  Pretty sure it goes above 50.
  - toomuchtodo 4y ago
    Perhaps my information is inaccurate, that’s the number I was told by a colleague at a financial services firm that just launched their related HYSA sweep product a week ago. Perhaps the limit is defined by each provider? https://en.wikipedia.org/wiki/Certificate_of_Deposit_Account_Registry_Service https://en.wikipedia.org/wiki/Certificate_of_Deposit_Account...

binkHN 4y ago

> ...it wouldn’t hurt for there to be somewhere you actually can rest cash securely, for a service fee. I think this is called a US government short-term bond, and they'll pay you.

downvotetruth 4y ago
More a deposit box.
- cjoelrun 4y ago
  https://www.nytimes.com/2019/07/19/business/safe-deposit-box-theft.html https://www.nytimes.com/2019/07/19/business/safe-deposit-box...