1. During the 1980s and early 1990s, a rash of bank failures occurred in the United States. Explain why these failures did not lead to runs on banks. 2. Excess reserves make a bank less vulnerable to...

1. During the 1980s and early 1990s, a rash of bank failures occurred in the United States. Explain why these failures did not lead to runs on banks.

2. Excess reserves make a bank less vulnerable to runs. Why, then, don’t bankers like to hold excess reserves? What circumstances might persuade them that it would be advisable to hold excess reserves?

May 26, 2022

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1. During the 1980s and early 1990s, a rash of bank failures occurred in the United States. Explain why these failures did not lead to runs on banks. 2. Excess reserves make a bank less vulnerable to...

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