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Banking and Money (Khan Academy)

Why Banks Invented a Bank for Banks

One careless bank can cause a run on every other bank. Putting all the gold in one shared vault fixes that. It also gives everyone one currency.

17 min150 XP available5 challenges

Pick the best answer

Three banks keep reserves of 8%, 10% and 12% of their deposits. One day, depositors at the 8% bank ask for 9% of its deposits. It cannot pay, and it fails. Why is that a problem for the other two banks?

Answer to continue.