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. Wire Transfer

    An electronic transfer of funds across a network administered ...
  3. Notice Of Withdrawal

    A notice given to a bank by a depositor. As its name implies, ...
  4. Bank

    A financial institution licensed as a receiver of deposits. There ...
  5. Time Deposit

    A savings account or certificate of deposit (CD) held for a fixed-term, ...
  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. Personal Finance

    8 Low-Cost Ways To Transfer Money

    If cost is your primary concern, there are several cheap(er) ways to move funds.
  5. 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.
  6. Personal Finance

    What is Fractional Reserve Banking?

    Fractional reserve banking is the banking system most countries use today.
  7. Investing

    Banking Stress Tests: Would Yours Pass?

    In weaker economic times, banks may be tested by the government to see how safe they are.
  8. Personal Finance

    Understanding Savings Accounts

    A deposit account held at a bank or other financial institution that provides principal security and a modest interest rate.
RELATED FAQS
  1. 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 >>
  2. How do you withdraw money from your 401(k)?

    Deciding to take a withdraw from your 401k is not a decision that should be made lightly. However, for those who needs funds, ... Read Answer >>
  3. How much does M1 enhance the multiplier effect of fractional reserve banking?

    Explore the impact of M1 on the economy and how the Federal Reserve uses it. Find out how the fractional banking system and ... Read Answer >>
Trading Center