there is no specific financial term known as "cash panic." However, it is possible that the term has emerged or evolved in the time since then, so I'll try to provide a general understanding of the concept based on what I know.
A "cash panic" could refer to a situation where there is a sudden and widespread fear or loss of confidence in the stability of a currency, leading to a rush by individuals and institutions to withdraw their funds from banks or financial institutions in physical cash form. In other words, it's a type of bank run but specifically focused on obtaining cash.
Cash panics can happen due to various reasons, including:
Economic Uncertainty: If there's uncertainty in the economy, such as a recession, rising inflation, or a financial crisis, people might lose faith in the currency's value and prefer holding physical cash, believing it to be a safer store of value.
Loss of Confidence in the Banking System: Perception of instability or concerns about the solvency of banks could trigger a panic, leading people to withdraw cash to protect their savings.
Government Policies or Interventions: Sudden changes in monetary or fiscal policies, currency controls, or other government actions may create fears of currency devaluation or restricted access to funds, prompting a cash panic.
Media Influence: The media can play a significant role in shaping public perceptions. Negative news or rumors about the economy or financial system can amplify concerns and lead to panic behavior.
During a cash panic, the increased demand for physical cash can strain the banking system, leading to liquidity problems for financial institutions. It can further exacerbate economic problems and make it harder for businesses to function smoothly.
To counteract cash panics and restore confidence, central banks and governments may implement measures such as increasing interest rates, providing reassurance about the stability of the financial system, or implementing measures to prevent excessive cash withdrawals.
and the financial landscape is constantly evolving. If "cash panic" has taken on a different meaning or significance since then, I recommend checking more recent sources for up-to-date information.