DEFINITION of 'Silent Bank Run'

A situation in which a bank's depositors withdraw funds en masse without physically entering the bank. A silent bank run is much like a normal bank run, except withdrawals are made by customers in the form of electronic fund transfers and wire transfers, rather than going into the bank and withdrawing cash or a bank draft. As banking has become more and more automated, the electronic movement of funds from one institution to another has become more common.

BREAKING DOWN 'Silent Bank Run'

During the 2008 financial crisis, many financial institutions faced silent bank runs, as depositors feared losing their deposits if banks were to collapse. Across America and Europe, particularly in the U.K. and Iceland, silent bank runs drained banks of their reserves, which served to deepen the crisis and force several large institutions to the brink of collapse.

RELATED TERMS
  1. Bank Run

    A situation that occurs when a large number of bank or other ...
  2. Silent Partner

    An individual whose involvement in a partnership is limited to ...
  3. Wire Transfer

    An electronic transfer of funds across a network administered ...
  4. Bank

    A financial institution licensed as a receiver of deposits. There ...
  5. Lender Of Last Resort

    An institution, usually a country's central bank, that offers ...
  6. Bank Draft

    A type of check where the payment is guaranteed to be available ...
Related Articles
  1. Investing

    What is a Bank?

    A bank is a financial institution licensed to receive deposits or issue new securities to the public.
  2. Personal Finance

    Retail Banking Vs. Corporate Banking

    Retail banking is the visible face of banking to the general public. Corporate banking, also known as business banking, refers to the aspect of banking that deals with corporate customers.
  3. Insurance

    How the Federal Deposit Insurance Corporation (FDIC) Works

    Learn more about the Federal Deposit Insurance Corporation (FDIC) and what happens to your deposits over $250,000 if a member bank fails.
  4. Insights

    The World's Top 10 Banks

    Learn more about the world's largest banks and how more financial power shifts eastward as China is home to four of the world's largest banks.
  5. Personal Finance

    Banking Has Changed: What Does It Mean For Consumers?

    Banks have long been leading spenders on technological innovations. Learn the key changes in the banking industry and what institution is right for you.
  6. Insights

    What Do the Federal Reserve Banks Do?

    These 12 regional banks are involved with four general tasks: formulate monetary policy, supervise financial institutions, facilitate government policy and provide payment services.
  7. Investing

    What's a Correspondent Bank?

    A correspondent bank is a bank that acts on behalf of another bank, usually a foreign bank.
  8. Personal Finance

    What is Fractional Reserve Banking?

    Fractional reserve banking is the banking system most countries use today.
  9. Personal Finance

    What's a Bank Draft?

    A bank draft is a type of check. The bank guarantees payment, making it a more attractive option for the check recipient.
RELATED FAQS
  1. What are the liabilities of a silent partner?

    Understand the position of a silent partner in a business, specifically how the liability of a silent partner is limited ... Read Answer >>
  2. What factors are the primary drivers of banks' share prices?

    Find out which factors are most important when determining the share price of banks and other lending institutions in the ... Read Answer >>
  3. What is the difference between a silent partner and a general partner?

    Understand the difference between a person designated as a silent partner and a general partner under the partnership business ... Read Answer >>
  4. Why do commercial banks borrow from the Federal Reserve?

    Learn how commercial banks borrow from the Federal Reserve to meet minimum reserve requirements, and discover the pros and ... Read Answer >>
  5. What economic indicators are important to consider when investing in the banking ...

    Find out which economic indicators are most useful for investors in the banking sector, especially those influenced by central ... Read Answer >>
Trading Center