Does the fact that your bank keeps only a fraction of your account balance in reserve make you uncomfortable? Why don't people rush to the bank and retrieve their money? How do banks prevent panics from occurring?
No, it does not make me uncomfortable that the bank only keeps a fraction of my money in reserve. Account depositors are insured by the FDIC up to at least $200,000, and in most cases, beyond that, if a crisis were to ensue. Because my deposit is ensured, I am completely content with the bank keeping only a portion on reserve, and the reserve that they keep is what is required by law. Even if I needed to access 100% of my cash, ...
This solution discusses bank panic and if the fact that your bank keeps only a fraction of your account balance in reserve should make you uncomfortable. Also discussed is how banks prevent panics from occurring and why people don't rush to the bank and retrieve their money.