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"If sentiment continues to deteriorate, ultimately we'll see a deposit run," Mr. Finch said.
He explained to Haarde that there was a gaping hole in KSF's liquid funds, leaving the bank ill-prepared to deal with a deposit run.
But a recent deposit run and a sharp rise in government bond yields to 6 percent — a level that at least one analyst called "unbearable" — have forced the government to act.
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It has increased the chances of deposit runs (if Cyprus can grab your money, why not Italy or Spain?).
In my case, however, a gas-rich formation known as the Jersey Deposit runs from behind my eyebrows to beneath my bald spot and then angles downward to the point of my chin.
"Just as you did not see mass panic and deposit runs in the U.S. after IndyMac, what happened in Cyprus is not going to spill over into Europe," said Jacob Funk Kirkegaard, a specialist in banking and government debt at the Peterson Institute for International Economics in Washington.
"Now we are seeing a flare-up [of withdrawals] from small depositors who don't know what to make of what is said on the evening news".More worrying still is the potential for deposit runs to spread to other vulnerable euro-zone countries such as Portugal or Spain.
What's more, a European fund would not have to be big enough to deal with simultaneous deposit runs across all of Europe but only with ones in the periphery, since money would presumably flow to banks in core countries such as Germany.
In December 2001, a series of deposit runs began to have a severe impact on the health of the banking system, leading the Argentine authorities to impose a partial deposit freeze.
Mr Shin's analysis of Northern Rock contains some fascinating detail on the retail-deposit run.
CDARS won't reveal the total deposits run through its system but says inflows are up 400% in a year.
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CEO of Professional Science Editing for Scientists @ prosciediting.com