It's not a serious question. You see when small banks fails, big bank came and absorb it.
So I just wonder what will happen if we got only one bank left.
All money businesses are within that bank and it never worries about withdrawal as long as people don't have the habit to have all their money in cash.
In Great Depression-era America, before the era of online banking, there might be only one choice of bank for people living in a small town. So when a bank was revealed to be undercapitalized, there would be a literal "run on the bank" where people raced to turn their deposits into cash before the bank ran out of cash.
If there is only one bank, and it does not have the ability to handle all depositor withdrawals, via backing from the money-creating sovereign, there will be a bank run.
This is where the other answer's comparison to Soviet Sberbank breaks down. There was never any possibility that deposits in Sberbank had counterparty risk. Because it was the state bank, any shortfall in assets would surely be covered up with money creation.
In the Soviet Union there was only one (State run) bank. Nothing happened, other than the whole economic system collapsing, the people were using it and were content since they knew nothing else. It still exists, by the way, and is one of the world's largest banks.
But in a free market environment monopolies don't work well. They get complacent, become arrogant, and squeeze the market, which opens opportunities for the competition and invites regulators to break them up. Ma Bell is one example, breaking it up led to significant changes in the communication landscape for consumers.
So I just wonder what will happen if we got only one bank left.
You forgot about credit Unions. Money would flow into them as the banks continued to have problems. But of course even a credit union can have problems.
Long before the number of banks and credit unions goes to one, somebody else will start a new bank. They will see opportunities.
All money businesses are within that bank and it never worries about withdrawal as long as people don't have the habit to have all their money in cash.
Not everybody has to pull their money out to cause a collapse. Just more deposits than the amount of cash the bank can get. Once they have to sell assets at a loss then the bank becomes unstable, which triggers more withdraws.
The most recent examples in the spring of 2023 still had deposits. They still had assets. They just didn't have a way to correct for their errors.
as long as people don't have the habit to have all their money in cash.
But that's the trick, isn't it?
Before the existence of the "digital age", what you got from your bank was cash.
Thus, people could revert to a cash economy.
