Thinking about bank runs. Prior to federal deposit insurance, why couldn't banks protect themselves from runs with explicit policies? Like, “if our deposits drop by more than X% in Y timeframe, we will automatically halt withdrawals.” Did any banks ever try this?
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Replying to @jasoncrawford
There was a consortium that would suspend convertibility and issue certificates. Will try to find the book cite for you later. It was a consortium because panics tended to spread, both because of customer perception all banks were at risk and because banks pulled deposits.
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Replying to @patio11
Fascinating. Did it work? Why did we need FDIC eventually anyway?
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Replying to @jasoncrawford
FDIC insurance works a lot better, since the US had systemic banking crises every 12-20 years. Where’s my kindle; it’s a great book.
7:05 PM - 4 Feb 2020
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