The lack of real-time money movement on weekends provides a crucial buffer for regulators. The FDIC uses this 48-hour window to arrange takeovers, ensuring deposits are safe by Monday morning and preventing a cascade of payment reversals that could destabilize the entire system.
The common model of a bank holding your money is wrong. When you deposit cash, you're buying a liability (a debt) from the bank. The cash becomes the bank's asset, and the deposit is their IOU to you, which is transferable.
We take for granted that a dollar at Chase is worth the same as one at Bank of America. This "no-questions-asked" property is the result of a century of regulation, contrasting sharply with the 19th-century "free banking era" where different banks' notes had fluctuating exchange rates.
The value of forgiven credit card debt ($55-60B/year) is a substantial, privately-funded transfer to defaulting consumers. This amount is comparable in scale to major public benefits like food stamps (SNAP at $95B/year), yet it's rarely discussed as a social support mechanism.
A deposit's value doesn't depend on the performance of the bank's specific underlying assets (like a particular mortgage). This insensitivity to private information is what makes them function like money. When this breaks, as with SVB, the deposit ceases to be money and becomes a risky claim you must analyze.
In the Voyager bankruptcy, customers successfully reversed ACH payments by claiming fraud. The financial liability didn't fall on the bankrupt Voyager but on its partner, Metropolitan Commercial Bank. This shows how fintechs can unknowingly expose their banking-as-a-service providers to catastrophic, unpriced risk.
Banks don't pass Fed rate increases on to depositors because of low "deposit beta"—a measure of rate sensitivity. Most consumers prioritize convenience over yield, allowing banks to capture the spread. This differs from institutional clients like deposit brokers, who are highly rate-sensitive.
The banking lobby's opposition to interest-bearing stablecoins isn't just about competition. It's a defense of the century-old regulatory system (capital requirements, deposit insurance) that makes bank deposits safe. Allowing stablecoins to offer similar features without equivalent safeguards introduces systemic risk.