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Saturday, February 4, 2023

What is a bank run? | Yahoo.com

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Bank runs happen when a big number of individual account holders remove a lot of money all at once out of concern that the bank might collapse. 

When consumers desire to withdraw significant sums of money quickly, a bank run may happen. In a fractional banking system, where banks only maintain a portion of deposits on hand as cash, this scenario is possible. They invest the remaining funds in interest-bearing assets or employ loans to create revenue. However, because banks typically only hold a portion of deposits in cash, they may encounter issues if clients request too many withdrawals too soon.Here are some precautions that banks may take: 

1. Slow the Pace 

2. Borrow Money 

3. Use Term Deposits 

4. Bottom Line 



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