Withdrawing Funds

Saga

Humour me, if you will – I'm not intelligent: what would be the likely consequences for institutions if 'everyone' with savings in accounts with historically low interest rates decided to withdraw their money and stick it under their metaphorical mattresses?

Neil_Jones

Saga said:

Humour me, if you will – I'm not intelligent: what would be the likely consequences for institutions if 'everyone' with savings in accounts with historically low interest rates decided to withdraw their money and stick it under their metaphorical mattresses?

That would just cause a bank run in all but name.  Those things generate their own momentum and once one gets going, they're quite hard to stop.  See what happened with Northern Rock, failed because of said bank run and because it was in trouble anyway, though it was bailed out by the state and later flogged to Virgin Money.

d63

Saga said:

Humour me, if you will – I'm not intelligent: what would be the likely consequences for institutions if 'everyone' with savings in accounts with historically low interest rates decided to withdraw their money and stick it under their metaphorical mattresses?

interesting! but would there be enough cash, banknotes, coins, currently in circulation available to stuff under said mattresses, before the treasury was obliged to print some more? 

Thrugelmir

Banks would increase rates to attract deposits. 

Sailtheworld

Burglars would have a field day. Interest rates may be low but at least savings accounts come with free insurance (well courtesy of the taxpayer at least).

Thrugelmir

Sailtheworld said:

Burglars would have a field day. Interest rates may be low but at least savings accounts come with free insurance (well courtesy of the taxpayer at least).

Levies are indirectly paid by those that borrow money. Compensation scheme is funded by the Finance industry itself. 

tacpot12

Even with no interest, the safety and convenience of a bank account wins over cash. 

blue_max_3

tacpot12 said:

Even with no interest, the safety and convenience of a bank account wins over cash. 

And it's not easy to spend large amounts of cash any more. Money laundering means there may well be an inquest for substantial amounts (if they take at all).

AskAsk

panic.  but it won't happen as sticking money under the mattress is not safe.  in some countries banks charge customers to deposit their momey with them as it is not safe to hoard cash at home.