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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