The Federal Deposit Insurance Corporation (FDIC) reports a record withdrawal of $472 billion from American bank accounts in the first quarter of this year, largely from uninsured deposits, as money market funds hit a record high of $5.6 trillion.
The Federal Deposit Insurance Corporation (FDIC) has reported that American depositors are withdrawing their funds at a rate unseen in nearly four decades.
The FDIC's latest quarterly findings show that during the first quarter of this year, customers withdrew a total of $472 billion from their accounts, breaking a record that has stood for 39 years.
"This is the largest drop in total deposits we've seen since we started collecting data in 1984. This is also the fourth quarter in a row where we've seen a decrease in total deposits," the report notes.
Uninsured deposits were the main source of this decline, according to the FDIC, as people sought to safeguard assets exceeding the $250,000 FDIC insurance limit.
This is reflected in the fact that the volume of insured deposits held by banks increased during the quarter, indicating a diversification of risk.
The large-scale departure of funds from banks comes on the back of the collapse of Signature Bank, Silicon Valley Bank, and First Republic, largely due to the Federal Reserve's significant increases in interest rates.
With the decline in bank deposits, money market funds have seen substantial weekly cash inflows. As the first quarter ended, assets held by money market mutual funds rose to a record $5.6 trillion, according to Crane data.