Definition: A bank holiday is a day where banks are closed to public customers and cease their operations, typically for nationally recognized holidays. Bank holidays can also refer to the emergency closing of a bank in an effort to stop a run on the bank.
What Does Bank Holiday Mean?
What is the definition of bank holiday? During a bank-holiday, the banks are closed to the public and consumers cannot carry out bank transactions, such as deposits, transfers, withdrawals, clearing transactions, or foreign remittances or use the e-banking operations.
On the other hand, although banks are closed, they may operate in the shadow, performing various functions that will allow them to effectively operate when they are open again. A holiday may occur to protect the banks from collapse and banking panic and to allow the reorganization of operations. Often, after a holiday, capital controls are imposed on the level of withdrawals to regulate the inflows and outflows from capital markets into and out of a national capital account.
Let’s look at an example.
The most widely known holiday in the US occurred in March 1933. More specifically, on March 5th, President Roosevelt declared a holiday for four days, forcing the nation’s banks to cease their operations and halting all financial transactions. At that time, there was no electronic banking system; hence, all financial transactions were suspended in response to economic emergencies, following the Great Depression of 1929.
However, countries around the world have predetermined bank holidays, and on those days, domestic and international banks operating on foreign soil do not process transactions.
The typical bank holidays in the United States are the following:
- New Year’s Day (Jan 1)
- Martin Luther King Jr. Day (the 3rd Monday of January)
- President’s Day (George Washington’s Day, the 3rd Monday of February)
- Memorial Day (last Monday in May)
- Independence Day (July 4)
- Labor Day (1st Monday of September)
- Veteran’s Day (November 11)
- Thanksgiving Day (4th Thursday in November)
- Christmas Day (Dec. 25)
Define Bank Holidays: Bank holiday means a day where banks are closed in observance of a national holiday.