How can your bank simultaneously a) promise you can withdraw your cash on demand and b) lend that same cash to someone else?
That’s possible only because they know only a few people will want their cash back on any given day. And if cash requirements are more than expected, they can borrow from other banks or the Federal Reserve, as needed.
Modern central banking and regulatory practices have practically eliminated the old-fashioned bank run. It still happens occasionally, but the system can absorb it.
Read the full article on Forbes.