@alex Conventional banking for many decades has been problematic due to fractional reserve rules. Fractional reserve means a bank only needs to have a fraction of a sum of money on hand in order to lend it to another party. If this sound ridiculous, congratulations for being sane. During the pandemic, the Federal Reserve removed fractional reserve rules, which now means banks can loan money they doesn't even exist. As long as everything stays in the system as a digital dollar, this can be maintained for some time. But any liquidity crisis (inflation spikes are an example) can send it all flying apart.

FDIC insures deposits for up to $250K, but some entitites had tens of millions of dollars tied up in SVB, and approx 95% of it was in asset classes that are not insurable under FDIC, so it is not at all clear what is going to happen. It also is left as an excerise to determine how FDIC is funded and how many dead banks they can eat before becoming insolvent themselves.