| Well what do you mean by cash? Keeping cash in a vault is of course highly impractical, and also doesn't produce any money for you or the bank. If that's what you want, I think you could find it but it would be at a security company (security as in guards), not a bank. The electronic equivalent would be depositing the money with the federal reserve. (What they do with the physical bills I don't know! But most deposits would be coming in electronically these days anyways.) However, up until the passage of the Emergency Economic Stabilization Act of 2008, the fed didn't even pay interest on reserves. [1] Now they do, but until 2022 this rate was only 0.15%. [2] The first problem with this would have been it didn't provide enough money to run the bank. SVB's non-interest expenses were over $2 billion annually for the last 3 years, so with $200 billion of deposits you need at least to earn 1%, just to keep the lights on. Also your deposits will go up and down but you'll still have to pay your rent, so better be more than 1%. (This is how they ended up invested in longer duration treasuries, to earn more money by taking on greater interest rate risk.) But the more fundamental problem with just keeing the money at the fed is that I don't think they would let you. It is not, traditionally, the social-economic purpose of a bank to just collect deposits and do nothing with them. Instead, the bank is supposed to take in deposits and then provide loans to the community (credit cards, business loans, mortgages, etc.). Probably this purpose has gotten a little fuzzy over time, since banks are not holding on to the loans, but it is the basic idea. There is a company calling itself "The Narrow Bank" that actually wants to do exactly this, deposit all client money at the fed. [3] Tellingly, the fed has not granted them approval yet to do so. Maybe they will! But notice that this proposed bank is bare bones: no physical branches, no tellers, no ATMs, no FDIC insurance, just a place to deposit vast amounts of money from institutional clients and earn money from the interest rate spread from the fed vs what you pay out. I do not think such a bank would be very popular with many "regular" people or businesses, who have needs beyond just stashing money under an electronic mattress. [1] https://www.stlouisfed.org/open-vault/2018/april/why-fed-pay... [2] https://fred.stlouisfed.org/series/IORB [3] https://www.tnbusa.com/2022/04/tnb-seeks-to-become-states-ne... |