What happens to banking institution if we stopped saving?

[Jasz]

Banks will become insolvent and customers will suffer if we stop saving. We would no longer be able to borrow money from them, which would make our economy vulnerable to a financial crisis. In fact, this is already happening: people are not saving enough to keep the economy going. They're not paying their mortgages on time, they're not putting aside money for retirement and they're not making any progress in paying down their credit card debt.

Without an increase in savings rates, banks will have to lower their interest rates on loans in order to attract borrowers. This means that many people who could afford to pay for their own homes will find themselves unable to do so because rents are too high or because they're being charged too much interest on their credit cards or auto loans. Banks have now become so dependent on taking out large amounts of short-term loans from depositors that they don't have enough capital left over after paying themselves back from the interest earned from these loans that they can lend out again. This is what happened during the Great Depression.

 

[Carpon]

I think when people stop saving banks will become defunct of course and first of all the workers will lose their jobs and the first threat this poses is unemployment and the more people are unemployed the more the rate of crimes increases. So this can aggravate into a security challenge all because we decide not to save or patronize banks.

A lot of banks make good dividend when they give out loans which are actually the funds of people who save and after the loan is paid ,they have a good interest on it which is usually shared by both the bank and the costumer that saved and by such the bank is able to generate their own income. If such is no longer obtainable, banks will run out of funds leading to their breakdown.

I think it won't be a nice scenario when banks lose their costumers who save money.

 

[Shaf]

This is one of the reasons the government's of various countries are so much against cryptocurrency. With the promise of so much more returns than banks and other traditional investment platforms offer, cryptocurrency became attractive to people.

This has lead to banks seeking for funds to run their business. Apart from hindering the banks from making money through lending, it also affects our economy as people who are seeking to finance their projects by getting loans from banks won't have the necessary funds. It also may make the banks to increase interest rate making it harder for people to repay their loans.

While looking at the problem, we also need to look at possible solutions. A lot of banks do not actively encourage customers to save. People make less money now and coupled with the rising inflation rates, savings is usually the last thing on their minds.


They can also provide incentives for those who save to attract new customers and keep old ones.