Banking is inherently unstable. Bankers are making it up as they go.
There are numerous examples throughout history that prove this:
- 🇨🇾 Cyprus Banking Crisis (2013) - Cypriot banks got in deep trouble due to Greek debt exposure, leading to bank runs and capital controls. Uninsured deposits were controversially used to rescue the banks through a "bail-in."
- 🇺🇸 IndyMac Bank (2008) - During the 2008 financial crisis, IndyMac, a California-based bank, saw depositors withdraw over $1.3 billion in just 11 days, leading to its collapse and takeover by the FDIC.
- 🇬🇧 Northern Rock (2007) - The first UK bank run in 150 years happened when the subprime mortgage crisis hit, with depositors withdrawing £1 billion in only three days.
- 🇦🇷 Argentine Financial Crisis (2001) - A huge bank run during the economic meltdown led the government to freeze bank accounts and convert dollar-denominated accounts to pesos, causing many to lose their savings.
- 🇬🇧 Barings Bank (1995) - London's oldest merchant bank went under after rogue trader Nick Leeson caused over £827 million in losses, leading to a run on deposits and the bank's eventual bankruptcy.
- 🇺🇸 Continental Illinois (1984) - Risky lending practices led to a bank run and the collapse of the seventh-largest US bank at the time, requiring a massive bailout from the Federal Reserve.
- 🇮🇹 Banco Ambrosiano (1982): Nicknamed "God's Bank" due to Vatican ties, Banco Ambrosiano collapsed because of fraud and a run on deposits, leaving a $1.4 billion hole in its balance sheet.
- 🇩🇪 Herstatt Bank (1974) - A bank run on this Cologne-based bank, triggered by massive forex trading losses, led to its collapse. An event widely referred to as the Herstatt crisis, this highlighted the importance of settlement risk in foreign-exchange markets and was a key factor that led to the worldwide implementation of real-time gross settlement (RTGS) systems
- 🇺🇸 Bank of United States (1931) - During the Great Depression, a run on the Bank of United States caused it to fail, making over $200 million in deposits inaccessible for its 400,000+ depositors and worsening the economic crisis.
- 🇺🇸 Great Depression Bank Runs (1930-1933) - After the 1929 stock market crash, a series of bank runs swept the nation, causing over 11,000 banks to fail and wiping out about $140 billion in savings (in today's terms).