Why Banks Fail – Young Children’s Journal

the eagle Fly low again. It is a phrase used when a company or person is running out of money. Banks can also go bankrupt, as you can see in the United States. There, Silicon Valley Bank (pronounced: silikon weli) Lost a lot of moneyThis is why it is closed. It is not yet possible to determine the outcome of this bankruptcy. But this is exactly what makes many people nervous. They fear a crisis. So companies also have big financial problems and people lose their jobs.

When there is no trust

In Europe, too, an important bank is suffering from money worries. It is Credit Suisse (pronounced: kredit swiss) bank in Switzerland. This bank has been in trouble for a number of years. Now, however, the situation is particularly precarious. There is one main reason for this: lack of confidence.

Especially in times of crisis, it can happen to some people Simply withdraw funds Fear of losing their money. For example, because these people are afraid that their bank will go bankrupt, and in the worst case, their money will simply go away. The problem: the more people withdraw their money, the less money the bank has. So she is actually broke.

So when people lose their trust, the banks are in real trouble. In the case of Credit Suisse, at least one solution was agreed on Sunday: Another Swiss bank agreed to bail out Credit Suisse.