#bankRuns are possible due to a misalignment between the actual reserves a bank holds and the depositors' perceived risk. If depositors lose confidence in a bank's ability to meet withdrawal demands, they may rush to withdraw funds simultaneously, creating a liquidity crisis for the bank.

#Banks typically operate on a #fractionalReserveSystem, where they keep only a fraction of deposited funds as reserves. If a large number of depositors fear the bank's instability and attempt to withdraw funds simultaneously, the bank may struggle to provide enough cash, leading to a self-fulfilling #panic and potential financial instability.

The Fed’s Secret, Ongoing Bank Bailout that Just Keeps Growing https://youtu.be/-Ttf7LDhD9U?si=JuumsGTOZQOTSqfw