A new Basel Committee working paper offers a comprehensive literature review of what drives non-maturity deposit (NMD) stability, and whether the bank runs of 2023 represent a structural shift or an extreme version of well understood dynamics. For digital asset firms and the banks that serve them, the findings are instructive, but the paper’s scope doesn’t fully address the longer term impact of stablecoins and tokenized money market funds on deposits.
The review, by a team spanning the Fed, FDIC, ECB, Bundesbank and Bank of England among others, concludes that traditional factors still dominate deposit behavior: deposit insurance coverage, uninsured depositor concentration, bank solvency concerns and market competition. Technology accelerated the 2023 runs, but primarily through faster information and coordination rather than faster withdrawals. The paper notes that large corporates have been able to move funds electronically at speed since the late 1970s, making the withdrawal speed argument less compelling than it might initially appear.
The 2023 failures shared four notable characteristics: extreme concentrations of uninsured deposits (Silvergate 89%, SVB 94%, Signature 90%), deposit concentration with large deposits from a few companies, sector concentration among depositors, and the combination of rising rates with large unrealized losses on fixed rate assets. One clarification worth noting: Silvergate is routinely grouped with SVB and Signature as a regulatory seizure, but it was in fact a voluntary wind down, triggered by the collapse of FTX and the resulting contraction of its crypto client base. The causal story is different, and that distinction matters for drawing the right lessons.
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