> For the complete documentation index, see [llms.txt](https://earn.blink.sv/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://earn.blink.sv/chapter-205-the-evolution-of-money-iii/205.04-lesson-bank-run.md). # 205.4 Lesson - bankRun **Screen:** bankRun **Headline:** Problems of Fractional Reserve Banking **Reward:** 2 **Text:** Banks sometimes issued more paper notes than they had deposits, which could cause problems in the economy. If people started to doubt the solvency of a bank, they might rush to withdraw their money all at once before others do. This is called a bank run. The sudden loss of deposits from the bank run could reveal that the bank was using too much leverage through Fractional Reserve Banking. This could cause a lack of liquidity and bring the whole financial system to a stop. \================================================================= ## QUIZ **Question:** What is a potential outcome of banks issuing more paper notes than they held deposits? **Answer:** A sudden drain of deposits en masse, leading to systemic fears and drying up of liquidity **Feedback:** masse, leading to systemic fears and drying up of liquidity **Correct:** true **Answer:** A nice vacation for everyone **Feedback:** Sorry, taking a vacation isn't quite the outcome we're looking for here. Better luck next time **Correct:** false **Answer:** A sudden increase in the price of gasoline **Feedback:** Gas prices might fluctuate for a variety of reasons, but this particular scenario doesn't have much to do with it. Try again! **Correct:** false