Depositors withdrew $126 billion from U.S. banks during the week ending March 22, Federal Reserve data showed. In contrast, total industry deposits fell to $17.3 trillion; a 4.4% decline from the same week last year as well as the lowest sum since July 2021.
The rise in withdrawals came mostly from the nation’s largest banks, with the 25 biggest U.S. banks losing $90 billion. While smaller banks were heavily affected by the collapse of regional lenders Silicon Valley Bank and Signature Bank, their withdrawals have since shrunk, with these banks gaining back $6 billion on a seasonally adjusted basis.
Bank deposits were on the rise during the early phases of the pandemic when interest rates were historically low, however, they were curbed once the federal reserve embarked on its ongoing interest rate hikes. Now, many observers credit the rise in withdrawals with the aggressive Federal Reserve campaign to curb inflation.