Actually a lot of depositors would be happy with a narrow bank that takes no risk, just holds the money at the Fed. But the Fed decided it's too safe so narrow banking is essentially banned. Seems fair if they ensure safety of deposits in return.
How is that banned? The Fed Fund Rate is effectively the same as the 1yr Treasury Note, except even if everything collapses like the Black Monday, 2008 or March 2020 (trifecta of bonds,stocks and commodities collapsing) you (as a commercial bank) can always and in any event access those funds.
before the 1980's, this was actually the case for a lot of countries. (the netherlands had the "spaarbank" for instance).
This was a very boring system.
You deposited your money, the bank held your money, you payed X for the account. You got some interested during the time this system was alive, but is far less then with other banks.
I am in Canada so not sure how it compares to the US.
But yes, I'll sign for a Full-reserve banking if I had a choice. I've already invested in my own company. I have no desire for a bank sending my money elsewhere. Especially since the interest rate they pay to a person is laughable.
Just use Big Five in Canada, I assume you have 100% guarantee then. In the US $250,000 is guaranteed by FDIC (per bank), so you would probably be fine here too. OTOH not all businesses can operate from a founder's wallet, some need loans. Who's going to provide those loans if every bank is a full-reserve bank?
Are you also willing to pay a fee for that when interest rates are so low the bank does not earn enough spread to cover the costs of maintaining those accounts?
That would a reasonable ask for such a “clean” bank, especially when the upside is that there is no “special assessment” being imposed due to recklessness of other “dirty” banks.
