‘No cash shortage’

Experts say there’s no reason to pull money out of banks


There is no reason to stock up on cash, experts say, despite consumers hoarding hard currency as the novel coronavirus spreads throughout the United States.

Across the country, consumers are pulling out cash at a greater than usual rate. There are stories of ATMs running out of bills, grocery stores restricting or ending cashback transactions, and reported cases of bank branches limiting transactions.

But that’s not evidence of a cash shortage, according to industry professionals. Rather, it’s likely just the individual location not holding surplus cash locally, be it an ATM, bank branch or grocery store.

“There is no cash shortage,” said Paul Benda, an expert in bank risk and security at the American Bankers Association and a former Department of Homeland Security official.

“There are some local branches whose vaults, frankly, only hold so much cash,” but the banks themselves are well-capitalized and stable, he said.

Little impact

The Federal Reserve, which distributes cash to banks through its FedCash service, said it has not experienced pronounced spikes in demand and has had no difficulty meeting demand for cash, according to a spokeswoman.

A primal reaction to any global stress, some consumers prefer to withdraw large sums of cash when panicked, in case of emergency.

But that rationale is flawed, much like the rationale to stock up on toilet paper, as there has been no indication that the banking sector is in danger of major disruption from the pandemic, or that credit card networks are going to change.

Rather, “we don’t expect to see any impact at all on cash usage, one way or the other,” according to David Tente, an executive director at the ATM Industry Association.

No limits yet

Neither Bank of America nor Wells Fargo, the two megabanks with a major presence in Charlotte, have restricted how much cash you can take out.

“Wells Fargo has not put in place any new limits on cash withdrawals,” spokeswoman Beth Richek said. “Wells Fargo has significant cash reserves, and we are continuing our normal processes to meet our customers’ cash needs.”

Truist, the Charlotte-based bank formed by the merger of BB&T and SunTrust, went so far as to waive ATM fees so that consumers could have easier access to cash “with greater confidence.”

Benda cautioned that taking out large sums of cash isn’t a good idea: deposits in banks are government-insured up to $250,000 and fat stacks of cash can make people a target for theft.

Remote working

Banks across the country are taking measures to ensure that they keep operating safely
and with as little disruption to the financial system as possible.

Many, including Wells Fargo, Bank of America and Truist, are expanding work from home
programs for the jobs that can be done remotely.

Like grocery stores and pharmacies, banks are generally considered essential services by officials, and there are detailed plans in place for how to handle pandemics. Federal regulators examine those plans as a part of the institution’s broader business continuity strategy.

Banks need to prepare for all the ways a pandemic can affect a financial institution, from
the stress put on company networks from increased teleworking to maintaining core functions as more employees take time off, according to federal guidance.

‘This is a war’

As the coronavirus spreads, those plans will be tested.

A critical juncture is the branch. Bank branches involve a fair amount of person-toperson contact and banks, for numerous reasons, are reluctant to close them.

So, preventative measures are being put in place to keep branches open. Truist, for example, has beefed up the cleaning of its thousands of branches, which still go under the names of BB&T or SunTrust. Others are distributing more hand sanitizer and gloves.

Banks will consider going to drive-thru only service in heavily affected areas, Benda, the
ABA official, said, and some have already implemented “golden hours,” which are designated times for vulnerable populations to visit bank branches.

“This is a war. We’re in a war to contain this virus,” Bank of America CEO Brian Moynihan said on CBS’s ‘Face the Nation’ on March 15.


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