4 ms·
This bank run happened based on fear of the scenario we are now in. No bank can withstand a bank run due to fractional reserve ratios. If the depositors lose b
by dangero 4y ago
This bank run happened based on fear of the scenario we are now in. No bank can withstand a bank run due to fractional reserve ratios.
If the depositors lose big then that will increase this fear going forward.
In other words, if all depositors are covered there is no longer a substantial fear of a bank run elsewhere. That’s how it stops it from happening again.
- ivalm 4y agoRealistically, this bank run occurred because the depositors were highly correlated. Other banks do not have such a correlated depositor base.