The U.S. is seeing the biggest spike in demand for cold, hard cash since the Y2K “bug” panic of 1999, as customers of U.S. banks and credit unions have made big withdrawals to brace themselves for coronavirus fallout. 

According to data by the Federal Reserve, the number of banknotes in circulation rose by $35 billion, from $1.808 trillion on March 11 to $1.843 trillion on March 18.

Last week the Federal Deposit Insurance Corporation, the agency that insures bank deposits and protects customers from any losses, urged people to keep their cash in the bank. FDIC Chairman Jelena McWilliams told Cheddar Wednesday that money in insured institutions will be safe, "even if we need to go above and beyond the bank assets to pay out depositors and then replenish the funds.” 

The FDIC historically has insured customer deposits up to $250,000 per depositor at FDIC-insured institutions. 

McWilliams said the agency doesn’t currently anticipate any bank failures directly resulting from the coronavirus pandemic and that despite the spike in cash withdrawals the FDIC isn’t worried about the system or financial stability of the U.S. The big banks themselves have also insisted they won’t need bailouts.

Nevertheless, the $2 trillion coronavirus stimulus bill, signed into law on Friday, includes a provision allowing the FDIC to insure deposits that total more than $250,000.

Updated March 31 to clarify that the FDIC does not anticipate any bank failures directly resulting from the coronavirus pandemic.

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