At the scales of financial infrastructure, bank deposits are not cash. They are debt issued by banks. The point of collateral is to give a bank’s word weight.
Cash is more of a general category of things that are suitable to use for similar purposes, than one specific thing.
28 since 2010.
In germany unless you're with DBAG it's not clear the government would step in and save you.
e.g. The Farmers and Merchants State Bank of Argonia with about $34M in assets.
The FDIC has stepped in as expected with all of these, I believe.
It’s disingenuous to claim that all banks are equal in terms of capabilities, assets, or risk.
Or say in the US, you'd buy that from US Bank, which isn't in the big 4 consumer, or top few commercial, and it could be let to fail.
It's still safer than a tiny bank, but it's not as safe as government bonds.
That's all it really boils down to - you pay a bit extra to get more safety.
You may be comfortable depositing $10MM in a US Bank reg D account, but I would not be.
Well actually for US Bank specifically I might because I know their business model is incredibly conservative. But replace that with another large but not big4 bank.
Have $xx,xxx in a checking account at a national bank. It’s a database entry, not a pallet of pennies. Furthermore, with fractional reserve banking, I sincerely doubt if there’s enough coins and bills in the country to account for the total “cash” in all the accounts, let alone all the assets.
Similarly, everyone involved in these transactions have access to the same banking system. There’s no reason you need to fly a C-5 with pallets of Swiss francs around. (Even then, it seemed absurd since both governments could access Swiss banks.)