Capital Loss Exemption

[Woolygimp]

If your interest bearing accounts were down for the year, wouldn't it behoove someone for them to cash out all of their money and report a capital loss? Then of course immediately re-deposit their savings, or am I missing something?

My thoughts were that the Capital Gains Tax only applies when you cash out whether it be 2 months, 5 years, or 25 years. So am I reasonable assuming that the Capital Loss Exemption works the same way?