You'd either write an insurance contract and pray you have enough money in your account when the redemptions come or you'd accept their deposit and put it into

You'd either write an insurance contract and pray you have enough money in your account when the redemptions come or you'd accept their deposit and put it into your account & basically be a bank with a negative interest rate (that negative rate being your insurance premium). The arbitrage is that in some places, universal deposit insurance costs >$0 but these banks are giving it out free. So there is a difference here that's exploitable on paper, but presumably the reason it exists is that it isn't in practice. It fits the strict definition of an arbitrage opportunity in that there's a difference in pricing that you could exploit without taking on market risk, in a frictionless vacuum where wires clear instantly and carry no transaction fees and a bunch of other unrealistic assumptions. I don't view it as real, but it gave me a chuckle, like when people turn DNS into an ersatz file system or similar hackery. Like a pun in the financial system.