Covid-19: Do not empty your bank account
"The safest place for your money is inside a bank." the FDIC said.
The Federal Deposit Insurance Corporation (FDIC) is working with federal and state banking agencies, as well as, financial institutions to consider all reasonable and prudent steps to assist customers in communities affected by the coronavirus, Covid-19. In addition, the agency is monitoring information issued by international and US health organisations.
Regulatory agencies have encouraged financial institutions to work with customers impacted by the coronavirus. Customers experiencing difficulties beyond their control should work directly with their financial institutions.
Bank deposits are insured by the Federal Deposit Insurance Corp. The FDIC points out that any deposits with a bank will continue to be protected up to at least $250,000. European countries operate similar deposit guarantees, although the maximum insured amounts differ, according to CNN report.
"The safest place for your money is inside a bank. Banks will continue to ensure that their customers have access to funds either directly or electronically," the FDIC said.
Fed revives the 2008-era program to unfreeze a $1 trillion borrowing market. The FDIC, Office of the Comptroller of the Currency and Federal Reserve also reminded Americans that banks are being encouraged to use the Fed's so-called "discount window" to take out short-term loans if they need them.
The Fed, which is essentially America's bank for the banking system itself, can provide emergency funding to financial institutions in times of crisis. It has also slashed interest rates to zero and dusted off several other financial programs from 2008 to ensure that banks have the funds they need.
Recently the Fed noted that big financial institutions have $1.3 trillion in common equity and hold $2.9 trillion in high-quality liquid assets on their balance sheets.
This means that the top banks have "substantial levels of capital and liquidity in excess of regulatory minimums and buffers" according to the Fed. Therefore, there is no need for people to take out big lumps of money from their banks. Your deposits are safe.
There's another significant difference between now and 2008. More consumers are using mobile payment apps like Apple Pay, Square Cash, Venmo, and PayPal as well as debit cards and credit cards for daily purchases. Many big retailers and smaller merchants are not only accepting these forms of payment; they are actively encouraging their use.
This is only expected to continue, especially since there are reports about how physical forms of money could be contaminated by the coronavirus. That decreases the need for people to run to the nearest ATM or bank teller to try and get their hands on as many $20s and $100s that they can.
Large banks, as well as many smaller regional banks, have all agreed to temporarily suspend stock buyback programs in order to ensure that they have the capital they need for loans and other daily operations.