Off the back of SVB, I feel like depositors should have to consent whether or not their funds can be used by the bank for lending.

The idea that the bank essentially owns the money in depositors’ accounts should be revisited.

If depositors do not consent to their funds being lent out, their funds must be held in whole by the bank. They will earn little to no interest on these funds. However, if the bank fails, the depositors are whole.

If depositors consent to their funds being lent out, the funds become the bank’s liability (like today), and the depositors earn a higher interest rate for the risk. If the bank fails, they are insured up to $250k by the FDIC.

The current practice leads to consolidation, as bank runs spark money to flow to “too big to fail” banks. A more centralized banking systems will be easier to control by the government.