For a 3 month treasury the drop will be tiny, like less than 1% tiny. It's would be easy to cover during a "bank run" given that (a) they hold some portion of deposits in cash anyway and (b) they've been earning interest on these deposits for years now. That’s my whole point..do you disagree?
dragontamer|3 years ago
I know that even a portfolio consisting of nearly exclusively treasuries can still decline in value. That's all I'm saying. Banks, even with their high quality debt instruments, aren't immune to the effects of a bank run.
The value of those short term notes still climbs up and down daily on the market. With a big enough decline, issues can arise.