The rate banks pay on savings accounts hit the headlines earlier this year, when an outflow of deposits contributed to the collapse of Silicon Valley Bank and other lenders. Suddenly, the mechanics of how banks attract deposits — and what they actually do with them — became a hot topic. And even before then, there'd been a lot of discussion over why many banks hadn't passed on the surge in benchmark rates to their customers by raising rates on savings accounts. So what exactly do banks use deposits for? How do those deposits behave? And can that behavior change in different interest rate environments? In this episode we speak with Josh Younger, senior adviser at the Federal Reserve Bank of New York and formerly at JPMorgan, about his recent research looking at how banks pass on higher interest rates and what it means for their own exposure to interest rates.

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