Run on the Bank

A run on a bank occurs when many depositors withdraw their money simultaneously because they fear the bank might fail. This sudden rush can deplete the bank’s cash reserves, potentially causing it to become insolvent even if it was financially stable before. Runs often happen during economic uncertainty or rumors of trouble, and they can threaten the bank’s stability, sometimes leading to a self-fulfilling crisis. To prevent this, governments and central banks may intervene with guarantees or emergency support to reassure depositors and maintain confidence in the banking system.