I understand why banks cannot pay people back in the moment, but wouldn’t they still owe their depositors their money when they eventually DO get the money back presumably once the recession is over?
This is all assuming the bank does not permanently go bankrupt of course. I understand that some banks may just never recover and close their doors for good.
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>This is all assuming the bank does not permanently go bankrupt of course.
That’s the problem. The bank owes lenders/ depositors money that it doesn’t have. If they declare bankruptcy, then whatever loans they’re unable to pay – including those of depositors – are effectively written off.
Whether the funds are secured/ insured are then dependent on the regulatory rules. And even that would likely cover a limited amount of money (per customer).
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