[JumpCrisscross]

> Is that not backwards?

No, the Bank or England is not confused about how central banking works.

TL; DR Banks don’t lend out deposits. Deposits are created through loans. Reserve requirements limit the rate of loan creation after the fact. Runs happen when depositors stop trusting the numbers created by a specific bank because they don’t think the bank will meet its reserve requirement at the end of the day.

[perl4ever]

"Runs happen when depositors stop trusting the numbers created by a specific bank because they don’t think the bank will meet its reserve requirement at the end of the day."

I don't think that makes any sense as a categorical statement.

If a bank is short of reserves, but is solvent, then there's no need to panic. Or if it's insolvent, but you know the FDIC will make you whole. The case where you rationally try to get your money out before other people is when you either know that there will not be enough in total assets for everyone in the long run, or you cannot afford to wait for a liquidity crisis to be over.

[benj111]

No I don't think the BoE is wrong either. What they've stated doesn't seem to fit with my understanding, and what you've said hasn't really clarified things.

"how central banking works"

I thought we were talking about normal banks???