If people all decide to remove their money from a bank at the same time, does it have a serious economic impact?

Question

I ask because since our money is backed in value (a precious resource like gold and oil) and doesn’t leave the country, doesn’t it also mean that our wealth remains intact as a nation regardless of whether or not the bank has it? (Ie, us citizens have it, so it doesn’t matter if it’s in a bank or not- the wealth is held by a U.S. citizen).

In: 8

Answer 1

If 5% of the cash were withdrawn in a day, the bank will collapse. You don’t need everyone to withdraw everything for that to happen