After Russia invaded Ukraine Thursday, people in both countries started withdrawing cash from banks.
It’s led to fears of bank runs, which triggered turmoil in the US during the Great Depression.
Bank runs can lead to bankruptcy, unemployment, lending shortages, and closed businesses.
Many of the Ukrainians who haven’t already fled the country as Russia’s threat turned into invasion stood in long lines outside of banks and ATMs hoping to take out their funds, Reuters reported on Thursday.
Meanwhile in Russia, people are also queuing outside of ATMs trying to get US dollars as its citizens worry their own currency’s value will continue to tank, according to the Wall Street Journal. Banks in the capital city of Moscow are running out of money, according to MSNBC.
All of this has led to fears of bank runs, which is when people withdraw money en masse because they worry banks will cease to function. It has the potential to be a self-fulfilling prophecy, destabilizing banks to the point of bankruptcy. That’s what happened in the United States during the Great Depression, and it triggered mass unemployment and loan scarcities.
In fact, what took place in the US between 1929 and 1939 serves as a case study of what can happen when banks can’t keep up with withdrawals: for years to come, there could be less money to go around.