Well yeah, of course.
But we wouldn't have any bank runs, right?
Wrong. That's why I'm telling you that even 100% reserve banking won't help you. If we take as a basis the definition that you've given, then bank runs could still happen (i.e. the depositors trying
to withdraw their funds immediately), but since there is no loaning (the money is in the money warehouse all the time), there will be no significant negative effects, if any, on the economy and no bankruptcies...
Well, you're right that it's theoretically possible, but it'd eliminate the vast majority of bank runs, would it not?
Remember, part of the definition is "fearing that their bank will be unable to repay their deposits in full and on time". You agree with that definition, right?
Sorry, didn't notice your answer in time
Actually, it is you who are
theoretically right (in assumption that 100% reserve banking prevents most bank runs). But lol, you don't know human psychology. Even if all the money is
said to be there (in the money warehouse), why should they, depositors, believe it in the first place, and not try to withdraw their money as soon as possible in the second, e.g. in the case there is "fearing that their
bank warehouse will be unable to repay their deposits in full and on time"? Holy crap, even if the money
is there, it still may not prevent from the crowd going wild...
Yes, I like this definition, especially that part about people trying to withdraw deposits immediately. It hits the nail on the head and correlates perfectly with the part about fear!