People are pouring cash into money market funds at the highest rate since the start of COVID as depositors flee banking turmoil

• Money market funds drew in the most cash since early 2020 as depositors sought safety during a shakeup in the banking industry.
• About $121 billion was poured in money market funds over the past week, the Investment Company Institute said.

US money market funds this week raked in the most cash in nearly three years as the first US bank failures to take place since the global financial crisis pushed depositors to find other places to stash their funds.

For the week that ended on Wednesday, $120.93 billion flew into money market funds, the Investment Company Institute said Friday. It was the most since April 2020, when the COVID pandemic was in its early stages, Barclays noted.

There was an influx of $20.15 billion into retail accounts, and cash from institutions tallied $100.78 billion. The increase was paced by cash put into government money market funds. The push of cash into money market funds resulted in a record $5.01 trillion in total assets tracked by ICI.

The weekly moves followed a remarkable rupture in the US banking landscape.

Last week, regulators closed Silicon Valley Bank and Signature Bank, the first such action since 2008, while Silvergate Bank wound down its operations. And on Friday, SVB Financial filed for bankruptcy.

The run on deposits that sank Silicon Valley Bank raised fears that other regional lenders could suffer a similar fate, leading to a $30 billion rescue package for First Republic Bank.

Investors have sharply driven down shares of First Republic Bank and other lenders with a high amount of deposits that would be uninsured by the FDIC, which limits protection to $250,000 per account. But in the case of Silicon Valley Bank, authorities said all depositors would be shielded from losses.