There’s a better way to ensure lenders can always pay their depositors.
Bill Dudley, a Bloomberg Opinion columnist, served as president of the Federal Reserve Bank of New York from 2009 to 2018. He is the chair of the Bretton Woods Committee, and has been a nonexecutive director at Swiss bank UBS since 2019.
Bank runs should be behind us.
Photo: Hulton Archive/Getty ImagesAlmost a year ago, America experienced a frightening financial shock: a run on banks, in which depositors raced to pull money out of institutions that they feared were about to collapse.
Such events can and should be a thing of the past, but this will require significant changes in the way the Federal Reserve backstops the banking system.
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Bank Runs Are Terrible. The Fed Can Eliminate Them.