In the unlikely environment of no demand for loans, banks would have no incentive to take deposits (ie borrow short), so instead would probably charge fees for reducing the risk of holding large amounts of cash for their account holders.
Such a storage facility would not have the profit margins of taking on the risk of lending, I'd guess that the net effect of a "fully saturated and content" economy would be "churn" as money was moved from account to account. Given that there would be no growth in such an economy, there would also be no wealth creation. So over time, the value of the money would deflate.
If the Gini coefficient went to zero (ie equal wealth distribution), the need for money would effectively disappear. So would banks.
No, because people still need to eat, consume electricity, consume entertainment, etc. So wealth is still created. If it's a no-growth economy, that wealth is consumed at the same rate it's created.
> So over time, the value of the money would deflate.
No, it would be constant (assuming no money creation by the central bank).
> If the Gini coefficient went to zero (ie equal wealth distribution), the need for money would effectively disappear.
No, you need money as a means of exchange and a store of wealth, just like now.
> So would banks.
No, because you need to store and transfer money.
why would that be the case?
the need for money (and lending) should not disappear as long as there is any scarcity in any required goods.
This is just how much their biggest client business and their day to day operations got conjoined
>I'd be willing to pay a fee to the bank to hold my money for me.
You are effectively doing this already (twice). Perhaps your bank charges you a yearly fee for the account in the likes of $10/year, but you're also "paying" by not investing the money yourself, of course, the bank has many lending opportunities that you have not so you might not be capable of doing so. But the point still stands.
You can pay them for a safe deposit box and they can properly _hold_ your money if you want, but that money won't be worth much in 30 years.
Unless I'm wrong and some banks provide a fully backed savings account? Doubt it would be worth the effort for them.
Depends on what your threat model is. A safe deposit box is safe from bank collapses/bail ins, but not against theft.
>but that money won't be worth much in 30 years.
In that case you'd probably be stashing gold rather than bills.
>Unless I'm wrong and some banks provide a fully backed savings account? Doubt it would be worth the effort for them.
because right now there's no demand for it. if there was a period of zero/negative interest combined with low confidence in banks, I'm sure that non-fractional reserve banks would pop up. Either that or people stash their money overseas.
They already do this. That's how payment cards work.
Let's say an economy is fully saturated and content and doesn't desire more loans, do banks collapse in such a case?