The viability of fiat currency is being stretched to its limit as banks run out of cash in New York amid the novel coronavirus pandemic.
Fear continues to spike and reports are now confirming that New Yorkers are taking out cash in record numbers, particularly the wealthy.
NYC Banks Struggle to Keep Up with Withdrawals
On Thursday, customers at a Midtown Manhattan Bank of America branch found that they were unable to take out cash. The bank had simply run out of $100 dollar bills, with many customers requesting to take out tens of thousands of dollars at a time.
According to The New York Times, the Bank of America branch at 52nd Street and Park Avenue temporarily ran out of bills and had to restock. [The New York Times] The shortage was caused by a major rush which saw increased demand for large bills.
The situation is the same in many other parts of New York, especially the more affluent areas. A JPMorgan Chase teller said that there has been a “nonstop” flurry of customers coming in and out over the past two days. They are stockpiling cash out of panic.
With the transition toward digital money, many banks were not expecting the rush and have therefore been unprepared. As of now, the Federal Reserve Bank of New York claims that it can effectively deal with demand surges, such that are common during the holidays and long weekends.
However, the current rush is unprecedented amid the coronavirus panic. The rush has also largely been wealthy individuals who have been stocking cash and products in bulk, concentrated in areas like the Hamptons, as Bloomberg reports. [Bloomberg]
Bank Runs Are the New Fear
Bank runs have not happened in the United States for a long time. In China, however, they are becoming more common. As BeInCrypto reported, China experienced multiple bank runs in November 2019. Hong Kong, of course, also saw similar developments at the height of its riots. Hong Kong ATMS even ran out of money then.
Such events show the limits of the current fiat-based system. Historically, such happenings have also been linked to increased demand in alternatives, like Bitcoin or gold. However, with the markets still rattled by the massive drop on Thursday, many are still wary of jumping into cryptocurrencies at this moment.
Perhaps, if these cash shortages worsen in the United State and elsewhere, we could see a clear rise in demand for Bitcoin as many people realize the need to take back their financial sovereignty.