Problem for the overall banking system

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Reference no: EM131746689

a) When can we say that a withdrawal of cash from a bank, or a loss due to bad investment by the bank, will not be a problem for the overall banking system?

b) When do we say that a large withdrawal of cash from most banks at every end of the year is also not a problem for the overall banking system?

c) Assuming the Central Bank does not do anything, what should we expect to happen at the end of the year when the withdrawals in b) take place?

d) Again in the case of a large withdrawal of cash from most banks as in c): what could go wrong and create a financial crisis?

Reference no: EM131746689

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