Whilst the banks are solvent, and paying interest, in the banks....

Whilst the banks are solvent, and paying interest, in the banks. But it’s all in the timing, as noted above by the time people realised that the banks were insolvent, what money they had was gone.

But consider what use cash might be if the banking system has collapsed. Would shops be open, with most transactions electronic? Would they have any stock, if they couldn’t buy stuff, or have it delivered? The issues surrounding a collapse of the banking system go far deeper than just what you do with your cash. Ten or twenty grand under the mattress for short term bribes is one thing, but I don’t think millions in the same place would be sensible.