Indeed, for some time now,
bank panics and liquidity crises have seemed a thing of the past, so much so that most economists, until very recently, have viewed them as a solved problem.
Franklin Roosevelt's warning, "the only thing we have to fear is fear itself," (21) was provoked by
bank panics and the terrors of poverty and disorder during the Great Depression.
A movie tie-in is Jimmy Stewart's It's a Wonderful Life, which shows the human side of a
bank panic.
While a run on the deposits of a single, solvent bank may be satisfied by disposing of its assets to other banks, this is not true if there is a generalised
bank panic affecting the banking system as a whole.
bank panic was the unstable financial system that allowed questionable financial practices by unscrupulous businessmen.
In a recent paper by Saunders and Wilson |3~ evidence of well informed depositors during the
bank panic of 1930-1932 is documented.
A Mestan dispelled the concerns that the proposed amendments to the Penal Code criminalising the spreading of information leading to
bank panic would lead to censorship.
The
bank panic and recession of 1907 provided a strong impetus to reform.
What is crucial for our purpose, however, is that a
bank panic that causes a drastic decrease in such measures of money as M2 and M1 stems from an increased demand for currency and reserves, the two forms of base money.
Second, should any eurozone country quit the euro, the anticipation of forced pesification is likely to set off a
bank panic, as depositors quickly switch their pesified holdings back into foreign exchange in order to move them out of the system and probably abroad.
78), "the sudden nationwide holiday performed the same function for the
bank panic as may a slap in the face for a person gripped by unreasoning hysteria.
The
Bank Panic of 1907: The Role of Trust Companies", Journal of Economic History 52, no.
