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Back in January, a guy on Reddit laid out a cunning plan to bring down his local bank. His plan was “to withdraw cash like 100$ from them and deposit it with a different bank then transfer it back to them and withdraw the same 100$ until they run out of physical cash… This in turn should cause a bank run… I would love for this bank to go out of business or lose public trust.”
Fortunately, others knew better and cautioned him in the comments not to embark on such a fruitless endeavour. They explained that he could withdraw as much cash as he liked from the bank’s ATM, but by wiring it back in, he wasn’t inflicting the kind of liquidity damage his plan maintained. His wires would simply flow into the bank’s electronic reserves, which the bank is eligible to swap for cash at the Federal Reserve. As a means of causing the bank to “lose public trust”, Reddit guy’s plan was ill-conceived.
None of this is to say it’s impossible to break public trust in a bank from the outside. On a much bigge…