You do NOT have to withdraw large amounts of cash from the bank for the coronavirus

(CNN Business) – Yes, these are alarming times. But that does not mean that you should go to your bank, empty your accounts and put all your cash under the mattress.

In the United States, bank deposits are insured by the Federal Deposit Insurance Corporation (FDIC). And this agency published on its website some useful guidelines to answer questions that consumers may have at this time.

First, the FDIC notes that any deposit within a bank will remain protected for up to at least $ 250,000. European countries have similar guarantees, although the maximum amounts insured vary.

“The safest place for your money is inside a bank. Banks will continue to ensure that their clients have access to their funds, either directly or electronically, ”explained the FDIC.

The FDIC, the Office of the Comptroller of the Currency, and the Federal Reserve also reminded Americans in a statement released Monday that banks are encouraged to use the Fed’s so-called “discount window” that allows them to obtain short-term loans. deadline in case you need them.

The Federal Reserve, which is basically the United States bank for the banking system itself, can provide emergency funds to financial institutions in times of crisis. It has also cut interest rates to zero and dusted off other 2008 financial programs to ensure banks have the funds they need.

Big banks are extremely capitalized

But that option may not be necessary, especially for larger banks. The Fed said in a statement last Sunday that large financial institutions have $ 1.3 trillion in common stock and $ 2.9 trillion in high-quality liquid assets on their balance sheets.

This means that major banks have “substantial levels of capital and liquidity above regulatory and buffer minimums,” according to the Federal Reserve. In other words, people don’t have to take large amounts of money out of their banks. Your deposits are safe.

“The banking sector is much better capitalized now than during the 2008 financial crisis. Regulations have only benefited them. The liquidity is there, ”said Matt Daly, head of municipal corporate teams at Conning, an asset management firm.

“This crisis feels very different from that of 2008. That was a real challenge for the plumbing of the financial system. We don’t have that now, “added Daly.

Cash may no longer be king in a Venmo world

There is also another significant difference between 2008 and now.

More and more consumers use mobile payment applications such as Apple Pay, Square Cash, Venmo and PayPal, as well as debit and credit cards for daily purchases. Not to mention that many department stores and smaller merchants in addition to accepting these forms of payment are actively motivating their use.

This trend is only expected to continue, especially as there are reports of how the physical forms of money could be contaminated by coronaviruses.

That lessens the need for people to run to the nearest ATM or bank to try and get as many $ 20 and $ 100 bills as possible.

Another good sign? Large and smaller regional banks have agreed to temporarily suspend share buyback programs to guarantee the capital they need for loans and other day-to-day operations.

Adding all this up means that people should not fear that banks will run out of cash. There are many other things to worry about, but the implosion of the financial system is not one of them.

“The main objective of the Fed’s decisions in recent days is to stabilize the system. The Fed is the lender of last resort, ”said David Bahnsen, chief investment officer at The Bahnsen Group. “I am not concerned about the broader banking system. Access to dollars will not be a problem, “he added.

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