Why would banks and exchanges need to pause withdrawals if they’re in financial trouble?
In: 101
Problems = They don’t have enough money.
Withdrawls = People taking money out of the bank. It makes more problems.
The banks don’t actually have all the money people invested into them. They take your money and loan it out to other people. They only have to keep a small fraction in reserve.
If you’re the first person to withdraw, you get your money. If you’re the last person to withdraw when there’s a run on the bank, you get to hope the federal government will eventually give you your money.
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