Steven Van Metre: Bank Runs are Back, Fed Reserves Plunge to Critical Levels

The phrase “bank run” conjures up images of panicked crowds lining up outside financial institutions, desperate to withdraw their savings. While we haven’t seen scenes quite like that in recent times, the underlying anxieties that fuel such events are resurfacing, fueled by a significant and concerning development: Federal Reserve bank reserves are plummeting to what some are calling critical levels. The “reserves” we’re talking about are the funds that commercial banks hold at the Federal Reserve. These reserves are effectively part of the banks’ safety net, allowing them to meet daily obligations, clear payments, and generally operate smoothly. A healthy…