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by gizmo686
1472 days ago
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Short term liquidity problems are handled by the repo market, where banks can take short term loans from other banks to cover withdrawals. In a crisis situation the lender of last resort (e.g. central bank. So federal reserve for USD) will step in and make the loans. The FDIC is designed to cover solvency issues, not liquidity ones. It does not kick in until afterva bank has failed. |
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