What happens if all the banks turned bankrupted during the pandemic?

Featured Image - Future of Work 10

Hi there, my name is decisive_redccurrant and this is my post hope you enjoy it!!!

Now as some people know coronavirus has had a big impact on shop and lots of other places. But most of all banks.

Banks are places were people go to collect there money or were thay go to store there money and the bank will take care of it for them. But what happend if the banks all went bankrupted.

Well here are some examples of when some banks went bankrupted or when they lost a lot of money!

17th century

In 1656, after several attempts, Johan Palmstruch was given permission by the Crown of Sweden to start a bank,named "Stockholm Banco." In 1661 it became the first in Europe to give out banknotes (money). As lending rapidly in just a few years, the value of the banknotes began to fall. In 1664 the bank closed operations, unable to give back the customers money. Palmstruch was imprisoned, the Crown took over the bank, and formed what is still today Rikets Ständers Bank, the national bank of Sweden, operated by the parliament. Wow that must of been hard. Now this was very sad for Johan Palstruch that he had to close down his bank simply, because he couldn't pay the costomers they money they wanted. As it looks it didn't go good for Johan Palmstruch.

19th century

In 1866, Overend, Gurney and Company suffered a bank run (a bank going bankrupted). It incorporated as a limited liability company in 1865, but with poor railway stock prices, it suffered losses which is very bad. Assistance from the Bank of England was refused, and payments were suspended on 10 May 1866. A panic ensued. The town's people were disappointed and devestated that they couldn't get their money from the banks.

Wow this is a very hard time for the people and the svitizens and the bank.

CONCLUSION

So these are some key example of when the worlds banks turned bank run or bankcrupted. So if the world banks turn bankrupted the world the world pretty much would be a different place and no one would be albe to get there money from anywhere!!

Hope you enjoy my post

decisive_redcurrant

Comments (4)

  • 327379P_LThumb.jpg EXPERT: Charlie Dyos Hunter Communications Analyst @ Bank of England
    23 Nov 2020

    Hi decisive_redcurrant, some fantastic history you have researched. There have been lots of examples of when banks have been unable to meet their customers demand for money (or gold) and have gone bankrupt. You have mentioned a couple of very famous examples, well done!

    In 1664 Riksbank became the first bank which we know today as a central bank (the Bank of England came 30 years later in 1694). Central banks are almost all owned by the government of the country and operate to ensure the stability of the financial system and the money supply. Central banks operate as a 'lender of last resort' when banks are unable to get funding from financial markets. This lending has stabilised many banks facing short term financial difficulties. However, can you think of reasons why the Bank of England may not intervene (like with Overend Gurney)?

    Reply to this comment
    1. Michael-Faraday-logo-250x250.jpg decisive_redcurrant | Michael Faraday School
      Charlie Dyos Hunter Communications Analyst @ Bank of England's comment 25 Nov 2020

      maybe because 150 years ago, Overend Gurney, the largest discount house in the City of London, suspended
      payment. The Times immediately christened this date ‘Black Friday’ due to the financial panic
      that ensued. The failure of Overend Gurney was caused by a change of business model, whereby
      it entered the lending business but with poor lending practices and insufficient risk management.

      Reply to this comment
      1. Olivia-Avatar.jpg Olivia @ the BNC
        decisive_redcurrant's comment 26 Nov 2020

        Thanks for explaining - please make sure all comments are entirely in your own words!

        Reply to this comment

You must be logged in to post a comment