So we’ve all heard about SVB’s collapse, and I was reading about Louis Remme’s great run where he raced a boat to reach a branch of a bankrupted bank to withdraw his money before the branch got the news.
So doesn’t that mean that in the past it would be technically possible for a person to withdraw all the money from their bank account multiple times from different branches if they could travel fast enough? Or maybe have multiple people withdraw from the same bank account at the same time at different branches?
How did banks synchronise their clients’ accounts?
In: 7
Your account was held at the particular bank branch where you opened the account (unless transferrred later).
Writing and cashing Cheques (checks) could make your account overdrawn. And gradually the Banks added more and more rules in place to limit this. Cheques could only be cashed up to certain values unless approved by calling your branch where your account is held to verify. Abuse would get your account blacklisted. Daily procedures at each bank ensure that cheques that had been cashed would be exchanged with the relevant branch. Where a cheque was guaranteed it had to be accepted but otherwise the cheque could be bounced – i.e. rejected and returned (and there were times this could take weeks to occur).
Credit cards work similarly today. Not every transaction is verified. There’s random checks and floor limits above which the device will contact the bank to verify before approving. You can go above your limit by spending lots of small amounts. There is a blacklist regularly updated to each card machine.
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