What is Bank run 🤔

 The collapse of two second-tier banks Silvergate and Silicon Valley Bank in the U.S. in one week is an extremely unpleasant event, but not a reason for a banking crisis. And the possible bank run caused by them is a threat to the entire banking system


⚙️A bank run — is a mass withdrawal of deposits by depositors due to doubts over the bank solvency.

 Due to the large number of requests for withdrawal of funds, the bank has drastically reduced its cash assets, which encourages even more customers to withdraw their money. One bank’s problems could cast doubt on others and provoke a bank run throughout the system at once, which would escalate into a banking crisis

 Bank runs wouldn’t be dangerous if banks didn’t use the partial reserve mechanism. This is when you give them $100, and they leave $10 in their account and for $90 they give a loan or buy securities

But then how will the banks make money ..

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