Bank Run
When many depositors rush to pull their money out of a bank at once because they fear it will fail.
In plain English
When many depositors rush to pull their money out of a bank at once because they fear it will fail.
Banks lend out most of the money you deposit, so they never hold everyone's cash at the same time. A bank run happens when fear spreads and depositors all race to the door. Even a healthy bank can be toppled because it cannot turn its loans into cash fast enough.
Today runs can happen on a phone screen in hours, as Silicon Valley Bank showed in 2023. Deposit insurance like the US FDIC exists to calm that fear.
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