Following the recent withdrawal of roughly $100 billion in deposits by consumers, regulators reaffirmed their assurance to the public that the banking system is secure.
On Friday, the Financial Stability Oversight Council had a special private meeting with the participation of Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell, and more than a dozen other officials.
According to a summary from the meeting, a New York Fed employee gave the group a briefing on “market developments.”
The readout was given on Friday shortly after the market closed and coincided with the publication of new Fed statistics that revealed bank clients withdrew a combined $98.4 billion from accounts for the week ended March 15. The sector was shaken by the abrupt collapses of Silicon Valley Bank and Signature Bank during that time period, thus that would have been reported.
Data indicate that small banks provided the majority of the funding. While deposits at large institutions increased by $67 billion, they decreased by $120 billion at smaller banks.
The withdrawals reduced the overall amount of deposits to slightly over $17.5 trillion, or around 0.6% of the total. According to seasonally adjusted Fed statistics issued on Friday, deposits have been steadily declining over the past year or so, decreasing $582.4 billion since February 2022.
According to Investment Company Institute data through March 22, money market funds’ assets have increased over the last two weeks, rising $238 billion to $5.13 trillion.
Powell tried to reassure the public earlier this week that the financial system is secure.
After SVB and Signature failed, emergency loan facilities were put up, and banks have been swarming to them. Data released on Thursday revealed that institutions borrowed $53.7 billion through the Bank Term Funding Program and an average of $116.1 billion per day from the central bank’s discount window, which is the largest amount borrowed since the financial crisis.