Today I want to share a small cut from a very
funny and classical old film “It’s a Wonderful Life”. Here is the link for the
short cut:
I think it was funny
is saver cannot understand that how the bank arrange the money. They afraid
they will lose their money so that all of them want to withdraw all of the
money which they saved in the bank. This situation is called “Bank Run”
About Bank Run. As we have
discussed, banks are financial intermediaries. They give consumers a place to
save and earn some interest. And then they lend those savings out, at interest,
to those who want to borrow. So this is mean bank don’t have enough currency
for the saver to withdraw all their deposit. That is mean if everyone tried to
withdraw at once, the bank could not pay everyone. Usually this doesn’t
happen—on a typical day deposits are about as big as withdrawals—but it can
happen. If it happened this will cause a “bank run” which could be
self-reinforcing.
To prevent this
happened. Every time if bank don’t have enough sum of the currency, they can
borrow the money from a central bank. It is a place that banks can borrow from,
which could help keep a bank panic from getting started. This is really helpful,
because bank run can cause a bank panic.
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