Do Instagram and TikTok make banks less safe?
In the original Mary Poppins film, the nine year old Michael Banks accidentally starts a bank run by demanding back his tuppence coin.
But the dynamics of bank runs appear to be evolving - and heading off such panics may be getting harder. These are utterly staggering sums. The contagion was cross-continental. The Bank of England told MPs on Monday that SVB UK, its British arm, had lost £3bn, or 30%, of its deposit base on the same day.
The dynamic is a combination of instant internet banking and social media, meaning that a system built on credibility, faith, and trust are now inherently more fragile. Think about the leading lights in tech on WhatsApp groups or Slack, advising the companies they are invested in to withdraw all their cash.And while SVB had its own special dynamic, with depositors concentrated in one industry, and with most deposits not covered by normal saver protections, these concerns do apply more widely.
All of this has not been helped by communications difficulties over what is and is not covered by US deposit guarantees.
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