Risk-free returns

The larger US banks who are not threatened by imminent bank runs are currently earning risk-free returns as, on average, they still provide deposit rates of 0.48% while money market funds currently pay 4.42%. This means a 3.94% net interest margin while placing the deposits with little additional credit or duration risk. With such juicy margins and disregarding any regulatory concerns, we believe there is no incentive for a bank to provide loans to its private and corporate clients from a pure financial perspective. On the other hand, clients know now where to move the cash they do not need in the short run.