Social media and online banking have made lenders more vulnerable to digital bank runs, experts say.
When prominent businesses and investors started pulling their money out of Silicon Valley Bank over concerns about the bank's solvency, word spread fast on Twitter.
Social media chatter, which amplified offline conversations within California's clubby tech community, as well as the ease of online banking, helped fuel a devastating — and very modern — "This is a case of a bank run that happened in less than 48 hours when people got a bunch of information through Slack, WhatsApp, text message and even emails saying, 'Houston, we have a problem,'" Andres Vinelli, chief economist at CFA Institute, an association of investment...
As a result, the one-two punch of social media and financial technology makes banks more vulnerable to a flash run than only a decade ago. Vinelli of the CFA institute said regulators should create"speed bumps" to deter digital bank runs, such as rules that slow the movement of money in and out of banks accounts.
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