In several parts of the world, bank runs have accelerated over the past few days after banking systems mysteriously started to go offline, raising fears that a potential system collapse is looming as geopolitical tensions rise all across the globe. Those who still think that these recent bank outages, closures, and disruptions were isolated events that will soon be fixed, will probably be unpleasantly surprised to discover that this is part of the ‘new normal’.
Conditions in the financial system are making many people lose their trust in banks, especially now that interest rate hikes threaten to unleash a credit crunch similar to what happened during the 2008 financial crisis. But problems in the financial world go way deeper than most people think, and that’s an extremely alarming situation for consumers, who don’t even know what they’re truly in for.
All over the world, and particularly in the U.S., Canada, the UK, and China, thousands of bank branches were suddenly closed since the burst of the health crisis. Banks say this is happening because people are still afraid to leave their homes and have been preferring to make their transactions using online platforms. Operational costs also have been going up, and banks tend to cut on expenses wherever they can.
In 2020, 2,126 bank branches were closed in the United States, according to S&P Global Market Intelligence. That was the highest number of bank closures ever recorded until 2021 when roughly 3,000 more branches disappeared from the system without further notice. From March 2020 to October 2021, over 4,000 branches were shut down. Nationwide, Wells Fargo closed a net 267 branch locations in 2020, and that number escalated to 993 by the end of 2021, according to data released in a report conducted by the National Community Reinvestment Coalition. “This suggests banks are simply rushing to close as many branches as they can, as quickly as they can, anywhere they can,” the authors highlighted in the report.
And although that itself is a matter of concern, the main problem is that the reduced number of functioning branches and available ATM machines means that many people will not be able to get cash on their hands in case an emergency hits. People will not be able to have access to their savings or regular banking services if an outage occurs.
On top of that, new rules backed by several global economies, including the U.S. government, do not require major banks to ensure that communities will have access to cash when their last branch shuts. In Europe, that has sparked some fierce consumer backlash over the past couple of weeks, but strangely enough, this news hasn’t hit the U.S. headlines just yet. In the UK, some dissatisfied customers started to move their money from their accounts and into their crypto wallets, while others engaged in a bank run to take their money out of the system. As a result, several banks have seized people’s assets and crypto portfolios amid growing fears that bank runs would continue to occur on a ‘faster, greater scale’, according to a recent report published by MarketWatch.
To make things worse, banking insiders are warning that 700 to 800 branches will be closed this year in the U.S. alone, ‘as high street banks continue to cut costs and attempt to speed up the process of digitalization,’ they said. With all things considered, it’s understandable why so many people out there have started to rush to withdraw their money from their accounts before more mandated interruptions are imposed by government authorities. The world’s population is just now realizing that the system is much more fragile than it seems, and that, in fact, their wealth is not protected in their bank accounts.
It won’t be surprising if more bank runs start to occur in the near future. The global population is finally waking up to the reality that those very few people in positions of power can choose to confiscate the money we worked for during our entire lives with no good explanation for it. Keeping in mind that things are going from bad to worse in the financial markets, it’s a good idea to start finding alternatives to protect our wealth before it all starts to fall apart around us. Our leaders won’t come to rescue us, and it is safe to say that bank bureaucrats most certainly won’t.