The Bank of Banks

Unless you are a close watcher of the financial industry, chances are you've never heard of the Bank of New York Mellon. But unbeknownst to you, it's actually one of the most important banks in the world.

Formed on July 1, 2007 by the merger of the Bank of New York and Mellon Financial Corporation, the Bank of New York Mellon is actually the oldest bank in the United States, tracing its origins back to the original Bank of New York established by Alexander Hamilton in 1784.

The Bank of New York Mellon also holds the largest amount deposits of any bank in the world - an incredible $25.5 trillion worth!

But where did all that money come from? Especially considering that BNY Mellon has very few branches, and even if you could find one, you would quickly discover that they have no interest in you or your puny life savings.

Well, as it turns out, the Bank of New York Mellon is actually bank to the world's banks! That's right - when the banks of the world have extra cash lying around, they give it to BNY Mellon, rather than depositing it within themselves (which wouldn't make any sense). At least this way, the banks can earn some interest on that extra cash until they actually figure out a way to use it.

Recently, with much of the developed world stuck in a liquidity trap, lots of banks have way more cash than they know what to do with, so BNY Mellon's cash deposits have been skyrocketing. But now it has gotten to the point where even the crafty bankers at BNY Mellon cannot figure out what to do with all that cash, so they have recently begun charging a fee to customers who keep too much cash in their accounts. Banks now actually have to pay BNY Mellon to take their money!

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