>Is this normal? I would assume that no bank has 100% liquid assets against liabilities Banks are required by law to have regulatory capital[1] and reserves[2]

>Is this normal? I would assume that no bank has 100% liquid assets against liabilities Banks are required by law to have regulatory capital[1] and reserves[2] in order to stay liquid and solvent. Longer explanation: "The reserves only provide liquidity to cover withdrawals within the normal pattern. Banks and the central bank expect that in normal circumstances only a proportion of deposits will be withdrawn at the same time, and that the reserves will be sufficient to meet the demand for cash. However, banks routinely find themselves in a shortfall situation or may experience an unexpected bank run, when depositors wish to withdraw more funds than the reserves held by the bank. In that event, the bank experiencing the liquidity shortfall may routinely borrow short-term funds in the interbank lending market from banks with a surplus. In exceptional situations, the central bank may provide funds to cover the short-term shortfall as lender of last resort. When the bank liquidity problem exceeds the central bank’s lender of last resort resources, as happened during the global financial crisis of 2007-2008, the government may try to restore confidence in the banking system, for example, by providing government guarantees[2]." If commercial bank is in trouble other commercial banks will try to help but if they can not help, central bank will try to help and if that is not possible government will step in. All in all, banking industry is tightly regulated and somewhat safe especially after 2007 fiasco. In the case of FTX, Binance said they would step in but they gave up. If FTX is profitable they can gradually loan money from private sector(banks, investment funds etc.) then start to repay their liabilities and eventually return loans. [1] https://en.wikipedia.org/wiki/Capital_requirement https://en.wikipedia.org/wiki/Capital_requirement [2] https://en.wikipedia.org/wiki/Reserve_requirement https://en.wikipedia.org/wiki/Reserve_requirement