Why would banks and exchanges need to pause withdrawals if they’re in financial trouble?
In: 101
Most of these comments are correct, but to point out:
Banks can get an “overnight” loan from the Federal Reserve to cover themselves if there are too many withdrawals at once. So not only does the FDIC help, low-level miscalculations as to withdrawal rates can easily be met.
There’s plenty of stopgaps on the way to a bank run, which is why they basically don’t happen anymore. If a bank is instituting pause withdrawals, it’s because something truly terrifying has happened, either with that one bank (gross mismanagement to the point that the gov’t isn’t helping as it should) or something systemic (…2009).
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