The gap between what banks are taking in and what they are loaning out is growing at its fastest pace in two years. Instead of using the money they’ve collected in deposits for loans, banks are buying up Treasuries; so far this year banks have bought up $136.4 billion in Treasury and government agency debt, more than double the $62.6 billion for all of 2011 and pushing their holdings to an all-time high of $1.84 trillion. Behind this conservative tilt is a drive for safety in a still-rocky economy. But at some point, will they seek higher yields?

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