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by JumpCrisscross 732 days ago
> banks aren't too unhappy about the dampening effect it has on liquidity flows

Correct.

The average FedWire is $5.4mm [1]. The Fed Funds rate is 5.3% [2]. ACH settles in 1 to 3 business days [3]. Actual/360, that's $800 to 2,400 to finance wholesale.

If, on the other hand, you're JPMorgan and can pay 2 bps for deposits [4], that cost drops to $3 to 9. These are the economics that drive bank consolidation.

[1] https://www.frbservices.org/resources/financial-services/wir...

[3] https://www.frbservices.org/resources/resource-centers/same-...

[2] https://fred.stlouisfed.org/series/fedfunds

[4] https://www.chase.com/content/dam/chase-ux/ratesheets/pdfs/r...