[sickoflibs]

RE :”And the bank still has the obligation to pay depositors from the income received from outstanding loans. That obligation isn't wiped out because the bank is out of cash.”

Not the way it worked in 1929.

Bank run and it closed, bank sold its loans to pay bondholders first. Those owing to the bank just owed it to the next bank.(in fact this happened to my GMAC home mortgage a few years ago here)

Savers and investors got nothing.

Probably what English banks are trying to avoid.

[sickoflibs]

This actually shows why the US is still the reserve currency even though the Fed creates lots of $$$.

EU banks are not safe, I know this sounds a bit funny, but here is an example.