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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It’s perfectly possible for a bank to go belly up and simply not have any money to pay back, the bank gets liquidated and most of your money will be gone. As for insolvent bank recovering, how? Their debts go nowhere and they have no money to continue doing business.
Of course, in developed countries there are fallbacks, usually central bank insures deposits to some limit, so if a bank in unable to pay, central bank does, it essentially comes out of taxpayers pocket. Or the bank is bailed out to the same effect. There are also significant checks to make sure such an event wouldn’t happen to begin with and bank failures have gotten rarer, but that doesn’t mean they can’t happen at all.
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