If a Bank run

[lightand]

If there were to be a possible bank run

What happens?
Thankfully never lived through one. And maybe I should post this on preppers. But I think the implications are bigger than prepping!
But I dont really know what the implications are.

I know there is the £85,000 back up or whatever it is. But I cant help thinking, if multiple Banks fail, it would be a long time before things would be back to any kind of normal. It would be a long time before ordinary people got the money back.

Were you not alive in 2008?

2008 was contained though. It would be interesting to know what would happen if even just a few large banks fell like dominoes.

They would have fell like dominos in 2008 but the government stepped in I expect the same would happen again as the implications are too great. There is now the £85k government guarantee on savings so that would cover most investors anyway

And thinking about it, since 2008 banks are regularly stress tested aren’t they?, so only the vulnerable, smaller ones might teeter.

I was.
But I am talking mega Bank failures.
Or even "just a few large Banks*.

The great implications bit is the type of scenario I am thinking.
And maybe Banks in several countries.
Even with Silicon Valley, several Banks in several countries were started to be exposed as shaky.

Not many replies. Thank you for the ones that have.

What would happen to say supermarkets, energy companies, governement departments, etc etc?

2008 was 'mega Bank failures'. The entire system was literally hours from collapse. Some of the world's largest banks went under. It was only coordinated action by the Fed, ECB and BoE that prevented the whole thing imploding

The Bsnks don't pay back the £85k, it's the FSCS. Banks pay into that as an insurance policy.

I have had a bit of a read.
I had forgotten quite a lot of 2008.
There were indeed quite a lot of Banks that failed.

True.
I need to read up some more about that.
Will want to read how much money is in the FSCS.

Why are you so worried about this @lightand ? It sounds like you're worried rather than curious, especially when you mention prepping.

How much is in the FSCS is irrelevant for the ordinary saver or bank user.
The FSCS is really an arm of the government Treasury. If it ran out of funds the government would step in to support it and stabilise the financial system.

If you recall in 2007 at the start of the financial crisis, people were queuing up outside banks to take their money out for fear the banks would crash.

At that point the chancellor promised to guarantee all savings deposits, however much was in them - not just up to £85k limit of the FSCS.

The government won’t run out of money - it can just print more money if it needs to. Of course this devalues the currency eventually, and leads to inflationary pressures…

RBS was the biggest bank in the world. It was bailed out by the Uk government and partially taken into public ownership.

HBOS was forced to merge with Lloyds tsb.

Norther rock collapsed.

Since then there are much tougher tests for bank solvency and the high street lenders are separate from risky investments.

The risk is pretty low now.

I'm sure there are other Finance mine bombs waiting for us but don't think it's a run on the banks.

Are you expecting to see people queuing out the door of banks? There would be no point they don’t hold that much cash.

2008 was serious and multiple banks failed but their savers didn’t lose their money.

There are significantly more rigorous stress tests done by banks and building societies than pre 2008. They also have to keep more capital reserves than before.

There’s really not a lot you can do. Spread significant savings between banks if you have more than 85K, and maybe keep some cash at home for essentials unless card transactions are temporary down?

I think it will happen. I want to try and prepare

I wouldnt expect to see a whole lot of that. Because it can be done electronically. Until it cant I presume.

Thank you for the other helpful replies too.

well both my grandmothers lived through the great depression and bank runs of the 1930's.
i would read up on what people did then; some cash and barter in kind, being more self sufficient etc.
i don't carry lots of cash in my home, i suppose i could transfer $ savings into a safety deposit box (which you would have access to). i don't think gold is practical (heavy and making "change" impossible).
owning your own home (no mortgage to pay the bank) would be my first priority if i was seriously concerned.
choice of banks sometimes bigger is better and that might be worth researching.

It really won't happen. Governments wouldn't allow it. Look what just happened with Credit Suisse.

Of course if you feel more comfortable sitting in a bunker wearing a tinfoil hat, go ahead.

I cant see how governments can stop it if banks fall like dominoes

Good ideas. Thank you.

Society needs a functioning banking system. The government could never allow system critical banks to fail. They have introduced safeguards that should prevent what happened in 2008.
Then again, it was a different lot in charge who at least had the hindsight to tighten regulation. I‘m not sure with this current lot, they don‘t seem to have a basic understanding of how anything works and are just all out for themselves, even if that means crashing the economy.
So even if I am fairly relaxed, I think the potential is there for this to go belly up in very short order.