What is the difference between a bank run and a liquidity crisis?
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In simple terms, a bank run is like a sudden stampede of customers rushing to withdraw their money from a bank because they're worried it might collapse. On the other hand, a liquidity crisis is when a bank doesn't have enough cash to meet its short-term needs, kind of like having a wallet with tooRead more
In simple terms, a bank run is like a sudden stampede of customers rushing to withdraw their money from a bank because they’re worried it might collapse. On the other hand, a liquidity crisis is when a bank doesn’t have enough cash to meet its short-term needs, kind of like having a wallet with too few bills when you need to pay for things. Both involve a rush for cash, but a bank run is about people losing trust, while a liquidity crisis is about the bank running low on cash.
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