How does a bank - short of cash - make up the difference.  In normal times everyone understands that most banks have perfectly good assets which turn into cash at a more-or-less predictable rate.  As the assets - like bank loans and mortgages - get paid off by the bank's borrowers there will usually be enough cash to pay customers who want cash.  Occasionally there are anomalies, which leave a bank a bit short of cash.  This is not a problem.  The bank will issue a special 'note' to another bank which is a promise to pay cash at some time in the near future, and receive cash now in return.  All it requires is for banks to be generally trusting of each others creditworthiness, and they usually are.  But when there is a credit crunch each bank is sufficiently wary of any other that none gives cash out.  Then the lender of last resort - usually the central bank - steps in and makes the loan.  In generally accepted banking practice the lender of last resort will save banks which have a liquidity problem (i.e. their assets cannot be easily turned into cash, although they remain valuable). Equally they will not rescue banks which are insolvent - meaning their assets are actually worth less than their liabilities.  It is never an easy call.