If everyone cashed out their banks accounts, would banks have enough paper money to pay everyone?

Question

Oh Great. no, yes, no, yes, no, yes. I'm getting dizzy!

Answer 1

As long as I get mine.....

Answer 2

Well, yes and no. Your bank money is federally insured up to $100,000 (meaning the bank can only guarantee your money up to $100,000). But technically, the bank does not physically have everyone's money. It only has a small percentage of it available for cash transactions and such. The rest is loaned out in forms of business loans, personal loans, mortgages, etc. This is how the bank makes its profits (on paid interest) and is why they always encourage you to have a minimum amount of money in your bank. So, if you're rich or win the lottery, you should never put all of your money into one bank, but rather diversify and invest.

Answer 3

No. A bank wouldn't make money if they just kept it in a vault. They loan it out to other people at higher interest rates than they pay on the savings accounts. They count on the fact that on any given day, only a small proportion of depositors will want to take money out.

If too many people try to take money out at once, it's called a "run on the banks".

Answer 4

I work for the fourth largest bank in the US and the anwer is absolutely not. We use deposited money to extend loans and lines of credits to other customers. If everyone were to cash out the FDIC would cover 100,000.00 of the customers money but the rest would have to come from the banks pocket wich in turn would cause the bank to go bankrupt.

Answer 5

Maybe not. The FDIC only protects 100,000. The other problem is that banks solely rely on our money inorder to make money. Banks loan out our money in order to collect interest therefore making a profit. If everyone stopped paying back their debt and cash out their bank accounts. Then banks will be SOL. Unless the FED decides to loan out money to the banks in order to keep them in operation. Sometimes the FED release money to banks at lower interest rates so that banks can borrow more money in order to give us people better interest rates.

Answer 6

Yes, they ave teams of monkeys in suspended animation in each bank in the world; these monkeys are expert counterfeiters. If a crisis like the one you described happened, banks worldwide woud initiate a protcol called "monkey money" , the simians would reproduce banknotes onto specially watermarked paper, so averting a disaster.

I've got to be honest though I've seen a monkey money test note and was not overly impressed; it looked like....well, it looked like it had been drawn by a monkey that had just come out of a six-year coma!

Answer 7

Yes

Answer 8

If everyone in the world cashed out, I don't think there would be enough paper bills. They would have to put their money-making machine to work overtime. I'd rather just have a big, fat check sitting in the bank; after all, where would I keep all those fat stacks of cash, in my mattress? (Ha)

Answer 9

No. They are generally only required to keep a small % of their accounts values. Less than 10 and it may be closer to 5%. After all where do you think loans come from. They couldn't stay in business if they only held onto everyone's money.

Answer 10

No. Banks reinvest most of the money we put in. Only a very small percentage of it is actually kept in the safe. They use most of it to loan to other investors. They predict how much money will be withdrawn every month and keep that much available.

Answer 11

Yes, they have to have enough cash on hand to cover every cent in their accounts. Casinos, oddly enough, work the same way. Much like banks, casinos have to have enough cash on hand to account for every chip on their floor, banks are no different. So to speak.

-J.