What is the best distinction between a liquidity crisis and a solvency crisis in a real historical case?

Safety nets help, but confidence still has to be earned. Deposit insurance, supervision and central bank facilities can reduce some run incentives wit...

A bank can hold assets whose eventual value exceeds liabilities yet still struggle to raise immediate cash without losses. Assets worth plenty tomorro...

Depositors may demand payment together when they fear others will withdraw first, intensifying a liquidity crisis. Once everyone tries to leave at onc...

Which bank constraint would you watch first?

Deposit creation is not a license to lend without limit; capital, payment obligations and credit risk matter. Creating deposits is not creating unlimi...

The simple picture of banks mechanically lending a fixed pile of prior customer deposits misses important balance-sheet dynamics. The piggy-bank pictu...

The balance-sheet entry is the easy part; keeping payments flowing is harder. A new bank loan commonly appears with a corresponding deposit on balance...

Did public finance create a banking innovation, or did banking innovation make a new form of public borrowing possible?

The relationship between a government borrower and an influential bank raises both credibility and independence questions. The link between public deb...

The 1694 institution and today's central bank aren't the same thing. The bank evolved over centuries; its original charter should not be mis...

Subscribers provided financing and received an institutional arrangement linking government credit and banking activity. Investors were not donating; ...