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A comment on Bank Run at Silicon Valley Bank. Parent comment

Re:Bank Run at Silicon Valley Bank by Retric on Thursday March 09, 2023 @09:53PM (#35089870)
That’s only relevant if you need to sell it or use mark to market accounting.

The US banking system has been given a great deal of regulatory leeway due to recent economic turbulence, including setting reserve requirements to 0%. So market value is only relevant if they need to sell before maturity.

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Re:Bank Run at Silicon Valley Bank by asimpletune on Friday March 10, 2023 @06:50AM (#35093251)
> So market value is only relevant if they need to sell before maturity.

Which is exactly what needs to happen when depositors ask for their money back.

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Re:Bank Run at Silicon Valley Bank by Retric on Friday March 10, 2023 @07:03AM (#35093334)
Not typically.

Banks generally have liquid reserves to handle significant fluctuations in deposits. If that’s insufficient they have incoming cash flow and the option to borrow money to make up the difference rather than instantly selling assets.

Thus in practice extracting 5% over a week is fine but there’s a threshold that will kill any bank.

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