Thinking this through, it’s the type of government-caused crisis that could lead to a CBDC.
Because I don’t know how businesses could practically operate with only a $250k max in each account.
They’d have to keep buying and selling T-bills. Instead they’d want to somehow send $1 worth of T-bills back and forth without doing constant buys and sells. They’d want fully digital dollars where their counterparty isn’t a bank, but the central bank…
And that becomes a central bank digital currency (CBDC).
If businesses lose money on deposit, then every business in the country will move all cash above $250K into Treasuries and we’ll have a system-wide bank run at Twitter speed.
They’ll tell their banker, “the only counterparty I want is the US Treasury.”