Montreal, Canada

Despite the huge rally in world markets since March and the apparent relaxation of bank credit stress investors in the United States are still sitting on more than $3 trillion dollars in near-zero percent yielding money-market funds. And any cash leaving money-market funds this year is mostly heading to bond funds, not equity funds.

Parking cash at 0% is a waste. There are definitely better alternatives.

It seems hardly financially morale to park precious liquidity at a bank when rates are virtually nil and the banking system remains on ice. Assets are probably the safest at America's biggest banks since they're too big to fail – J.P. Morgan Chase, Bank of America and Wells Fargo come to mind. U.S. Bancorp is also a good bet.

Still, you're not compensated for parking your cash at a bank; the real winners are the banks themselves whereby your cash is loaned out at six or seven points above your rate of paid interest or parked into Treasury bonds at 3.5% or higher. Banks are making a killing on the yield curve.

Depositors are reminded that the U.S. banking system remains fragile. Many smaller banks are now suffering rising loan losses on commercial real estate (like the big boys) while not protected by the "too big to fail" federal bailout umbrella. According to the FDIC, 98 U.S. banks have failed this year.

Overseas, several banking systems also remain uncertain. The United Kingdom, Ireland, Greece and even several banks in France, Italy, Austria and Germany are operating with either full or partial government guarantees. Banks in Sweden are also dodgy because of heavy loan exposure across the Baltic Republics.

The worst of this round of the credit crisis has indeed passed but the next wave of problems lies ahead because nothing has been done to address the causes that tipped the financial system to the edges of the abyss last fall. Derivatives are still trading without a clearing house or oversight, toxic assets remain on bank balance sheets and mortgage originations are now almost entirely at the discretion of the U.S. federal government.

If you hold or park cash at a bank consider the following cash-based alternatives to not only safeguard your assets but also boost your total yield:

Short-term Treasury Bonds (yielding 1%)

Short-term Investment-Grade Bonds (yielding 2.5% or more)

Everbank Money-market funds (1.77% yield)

Granted, the above rates are not exactly your ticket to the lottery. But compared to parking cash at almost zero percent at a bank, you're boosting your effective yield by ten-fold or more. Also, by spreading your liquidity across Treasury bonds, investment-grade bonds and Everbank, you're also reducing counter-party risk; the last thing you want to deal with is the FDIC in the event of a bank failure.

Cash management and counter-party risk management are still important. Banks are not out of the woods, yet. More losses loom over the next 12-24 months and bank failures will increase. Take precautions now.