How to Prevent Bank Runs

This chapter focuses on how bank panics can and should be prevented. There are four methods proposed for preventing (or decreasing) bank panics should be prevented: capital adequacy, reserve adequacy, government-provided deposit insurance and lender of last resort. The chapter reference the financial crisis of 2008 and explains that the reason for bank panics to still occur include: poor regulation, lack of reserves, lack of deposit insurance and failure of the lender of last resort.

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