A bank manages its customers' money and lends it out. But if customers all try to take their money out at the same time, there's a problem - no bank has that much cash.
On September 14, 2007 the employees of the British bank Northern Rock unexpectedly had a lot to do: before the doors, long queues of savers had formed who had only one thing in mind - they wanted their money back.
The following Monday even more customers came; the counter hours had to be extended.
The employees paid out about two billion pounds to their customers, then the coffers were empty. The bank faced the end.
Even a guarantee statement from the government in London could not reassure Northern Rock customers. They no longer wanted to entrust their money to a bank that had liquidity problems.
As a result, the financial institution was nationalized, and the securities' department responsible for the crash was wound down. It was only four years later that a buyer could be found for the failed bank.
After the collapse of Lehman Brothers in 2008, Angela Merkel and her Finance Minister Per Steinbrück promised Germans that a similar collapse would not happen here: your savings are safe, no matter what.
The depositors could calmly wait to see what would happen, and certainly should not go to the bank and demand to withdraw their money.
How this should be done in an emergency, Merkel and Steinbrück did not say. That would be interesting, however, because Germans have saved up a great deal. Last year, private savings in Germany added up to 626 billion euros.
Nevertheless, in the last few days, Transport Minister Peter Ramsauer has repeated the mantra of German monetary policy: "The savings are safe."
Fear of panic
The real problem with a bank run is not that the depositors want their money back, the problem is they all want it at the same time. And a bank can not keep enough money in the safe to satisfy all claims immediately.
In an interview with DW, Dirk Schiereck, an economist at the Technical University of Darmstadt gave the reason: "A bank issues long-term loans and refinance them through short-term deposits. This means that if people pull their deposits, it creates a refinancing gap for the bank."
Ramsauer, as he says himself, is a businessman. And as such he knows: "There is little difference between economic realities and psychology." And in a bank run, psychology means that bank customers themselves become part of the problem.
Depositors are well aware that the bank cannot pay out their money, but they try anyway. They fear that the money will otherwise be lost. But the more people who do this, the more likely it is that they will not be able to get their money back.
The disaster is coming - but when?
There have been bank runs time and again: After "Black Thursday" in 1929 on Wall Street or in the case of the Argentine state bankruptcy in 2001. Seven years later in Switzerland, UBS had to pay off 25 billion francs within a short time - the central government had to intervene to rescue the bank.
Greece is now experiencing a kind of creeping bank run. Out of fear of a Greek exit from the euro, savers want their deposits back, which official figures suggest add up to 100 to 500 million euros every day.
After the banking crises of the past several years, and in view of the public debt crises in Europe, a bank run in Germany can not be ruled out, despite the politicians' promises. Hans-Peter Burghof, a bank expert at Hohenheim University, is certain that "the danger is there. But when it will strike, we do not know."
Small cause - devastating effect
If investors and savers feel uncertain, only a small, seemingly inconsequential event is needed to trigger a bank run. The straw that breaks the camel's back could be the collapse of a large company or an unexpected economic downturn. This, Burghof says, could provide the spark that explodes the powder keg: "Some politician says something awkward, and then it happens."
Then we would see. Are the deposits of savers really safe? Is it even conceivable that the government could stand up for German deposits totaling 626 billion euros? What happens to my money saved if the government starts up the money machine, prints new bills, and simply "inflates away" the debt? My money would be still there - but it would be worth nothing.
If in the event of a bank run, a scenario of worried, irate depositors forming long queues at the counters, could become reality, Burghof says. Then the bank could simply close, so that no one could withdraw any more money. "Then they could relax and say everyone may withdraw one hundred euros a week now to live off."