Bank Run
A bank run is a rapid withdrawal of deposits or other short-term funding that can exhaust a bank's available liquidity.
Central-bank crisis-liquidity concepts covering bank runs, secured emergency lending, collateral, and the boundary between liquidity and solvency.
This section explains how funding stress can become a banking crisis and what central-bank liquidity can and cannot do. A bank run begins when depositors or short-term creditors withdraw faster than a bank can produce cash. A lender of last resort may contain that pressure by lending against eligible collateral.
The essential distinction is between liquidity and solvency. Emergency credit can bridge a timing mismatch for an institution whose assets remain sufficient, but a loan does not replace equity after losses have depleted capital. Collateral values, haircuts, legal authority, supervisory information, program pricing, and repayment capacity therefore matter as much as the headline amount of support.
Fiscal rescue programs belong to a related but separate category. For example, the U.S. Troubled Asset Relief Program used Treasury authority for capital investments and other crisis measures; it was not a central-bank lending facility.
Use these pages to distinguish a temporary cash shortage from a capital deficit, a secured loan from a public investment, and liquidity support from resolution of a failed institution.
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A bank run is a rapid withdrawal of deposits or other short-term funding that can exhaust a bank's available liquidity.
A lender of last resort supplies secured emergency liquidity when private funding fails, while leaving insolvency and recapitalization to other tools.