> Bang: that bank just became insolvent. Is this actually the model of the world you want? I'm not sure what the problem is, this model to me actually seems re

> Bang: that bank just became insolvent. Is this actually the model of the world you want? I'm not sure what the problem is, this model to me actually seems reasonable. The alternative is to claim that "We are solvent as long as our clients keep deposits in our bank and are happy with an interest rate lower than our competitors for 30 years". In fact the scenario you're describing is basically what happened to SVB except the interest rates increased more. I guess the main issue is that generally banks do take a risk by borrowing short and lending long, and hope that things work out in the end.