Web Trader MT5
A bank run is what happens when too many depositors lose faith at the same time and rush to withdraw their money. The mechanics are brutal in their simplicity. Banks don’t keep most of your deposits in a vault; they lend them out. So when withdrawal requests spike past a certain point, the bank can’t meet them, not because it’s insolvent, necessarily, but because its assets are illiquid. Loans don’t unwind on demand.
The terrifying thing about runs is that they’re rational at the individual level and catastrophic in aggregate. If you think the bank might fail, getting your money out before everyone else is the smart move. Once enough people think that way, the prophecy fulfils itself.
Modern bank runs don’t look like the queues outside Northern Rock in 2007 anymore. They happen on apps, in minutes, with billions of dollars moving before anyone shows up at a branch.
Example: Silicon Valley Bank, March 2023. Depositors pulled $42 billion in a single day after concerns about the bank’s bond portfolio went viral on Twitter and in startup founder WhatsApp groups. The bank was shut down by regulators the next morning. The whole thing took about 36 hours from the first whisper to the FDIC takeover.
