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Yes, a bank's cash reserves can become insufficient.
The likelihood of default rises as more people withdraw their funds, prompting more people to withdraw their deposits. The bank's reserves may not be sufficient to cover the withdrawals in extreme instances.
Given that the majority of banks do not have enough cash in their branches, it is possible that they will be unable to issue everyone's funds.
This is referred to as a bank run.
Of course, one of the most important functions of banks is to provide loans, and they do it by using your deposits. In fact, most banks have a defined limit on how much money they can retain in their branches due to security concerns.
In normal times, only a small percentage of deposits are claimed at any given time, therefore the banks' cash reserves are sufficient to meet demand. If that isn't the case, the Federal Reserve can issue the funds as a loan, as long as the bank is stable.
#bank
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