If bank runs can be caused by social media, what happens when FedNow enables instant payments?

The Federal Reserve's new instant payments system, FedNow, is designed to provide faster and more efficient payments between banks and customers. While it might seem that this could lead to potential issues with bank runs, it's important to keep in mind that FedNow is just a tool for facilitating transactions.

It's unlikely that the availability of FedNow would directly cause bank runs. However, it's possible that the increased speed of transactions could impact the perception of bank stability among the public. If news outlets or social media begin to circulate rumors or reports of a bank's financial troubles, customers who can quickly move their money electronically may do so, leading to a rapid outflow of funds.

In this scenario, the key factor would be the perception of the bank's stability, which could be influenced by a variety of factors unrelated to FedNow.

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