Silent Bank Run

AAA

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.

INVESTOPEDIA EXPLAINS '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 Failure

    The closing of an insolvent bank by a federal or state regulator. ...
  2. Reservable Deposit

    A bank deposit subject to reserve requirements. Reserve requirements ...
  3. Bank Run

    A situation that occurs when a large number of bank or other ...
  4. Bank

    A financial institution licensed as a receiver of deposits. There ...
  5. Panic Selling

    Wide-scale selling of an investment, causing a sharp decline ...
  6. Debit Card

    An electronic card issued by a bank which allows bank clients ...
RELATED FAQS
  1. What are some of the well-known no-load funds?

    The capital adequacy ratio promotes stability and efficiency of worldwide financial systems and banks. The capital to risk-weighted ... Read Full Answer >>
  2. How do you calculate payback period using Excel?

    Each financial institution offers similar products for its banking customers, including savings accounts, certificates of ... Read Full Answer >>
  3. What formula can I use to calculate interest on interest?

    Use the compound interest formula to determine the amount of accumulated interest on the principal amount invested or borrowed. ... Read Full Answer >>
  4. What are the pros and cons of online checking accounts?

    Online banking offers a convenient alternative to keeping your checking account with a brick-and-mortar bank. With an online ... Read Full Answer >>
  5. Why would you keep funds in a money market account and not a savings account?

    Most banks offer both money market accounts and savings accounts for depositors, although money market accounts are less ... Read Full Answer >>
  6. What is the difference between a state and a federally chartered credit union?

    The world of credit unions is divided into two categories: state chartered and federally chartered. Though they share many ... Read Full Answer >>
Related Articles
  1. Home & Auto

    From Booms To Bailouts: The Banking Crisis Of The 1980s

    The economic environment of the late 1970s and early 1980s created the perfect storm for a banking crisis.
  2. Savings

    Are Your Bank Deposits Insured?

    Learn how the FDIC is helping to keep your money in your pockets.
  3. Options & Futures

    The Ins And Outs Of Bank Fees

    These service charges could nickel and dime you right out of your nest egg.
  4. Options & Futures

    Choose To Beat The Bank

    From internet banking to credit unions, it's in your power to cut fees and maximize service.
  5. Options & Futures

    Who Backs Up The FDIC?

    The FDIC insures depositors against loss, but what happens if it runs out of money?
  6. Savings

    Is A Premium Checking Account Worth It?

    Premium checking accounts give you free checking and other perks in return for keeping a certain balance in the bank. Is that the best use of your money?
  7. Savings

    Top Premium Checking Accounts of 2015

    Which banks offer the best deals for premium checking accounts – and what do you have to do to qualify for one?
  8. Economics

    Explaining Risk-Weighted Assets

    Risk-weighted assets is a banking term that refers to a method of measuring the risk inherent in a bank’s assets, which is typically its loan portfolio.
  9. Savings

    Understanding Savings Accounts

    A deposit account held at a bank or other financial institution that provides principal security and a modest interest rate.
  10. Personal Finance

    How The SWIFT System Works

    SWIFT has become the global standard for processing instructions and messages for payment and securities trade transactions. Investopedia explains what SWIFT is, how it works, how it makes money, ...

You May Also Like

Hot Definitions
  1. Net Worth

    The amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure ...
  2. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  3. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  4. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  5. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  6. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
Trading Center