Paper 03 · The evidence
When Stable Deposits Stop Being Stable: A Behavioural Reassessment of Core Funding in Regional Banking
Deposits stable in volume, changed in character.
What this paper argues
Since the 2023 deposit runs, banks have rebuilt liquidity buffers and strengthened governance. Coverage ratios improved. The behavioural character of the funding did not.
The paper argues that SME and corporate operating balances are increasingly behaving as a tactical liquidity pool rather than as core funding — stable in volume, changed in character. Regulatory ratios measure the volume. They do not measure the change.
This is a decision-integrity problem before it is a liquidity problem: the institution's own classification of its funding no longer matches what its depositors actually do.
Terms used here are defined once in the glossary: Decision drift
Start with one decision
Name an important decision made in the last ninety days that your institution could not fully replay today — the rule that applied, the data that was live, the authority that permitted it.