What is the role of a bank? It takes deposits and lends them to borrowers, typically on business loans or mortgages. The latter have rather long maturities, deposits can be withdrawn at any time. In other words, bank perform a maturity transformation. Doing so, they take the constant risk of not being able to satisfy sudden withdrawals from deposits. Hence the help of central banks as lenders of last resort.
What this means is that no bank is liquid enough to satisfy the withdrawals of all deposits. In fact, if any bank would be able to do so, it would lose money, as it is paying interest on deposits that just sit idle in the vault. Thus any bank risks being subject to a run.
If Senator Charles Shumer reads this, I hope he will come to realize the situation and send letters about every bank in the US, or even every bank in the world, stating that the bank cannot honor deposits. Because this is true, and has always been true.
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