Final answer:
The biggest threat to cash disbursements is a bank run, where fear leads to mass withdrawals, potentially causing the bank’s failure due to the fractional reserve banking system.
Step-by-step explanation:
The biggest threat to cash disbursements is the potential for a bank run, which occurs when the fear and uncertainty suggesting a bank might fail leads to a mass withdrawal of money by depositors. If a large number of depositors simultaneously decide to withdraw their funds, the bank may not have sufficient cash on hand to fulfil these demands and may ultimately fail.
Banks operate on a fractional reserve system, meaning they do not keep the majority of deposits on hand because funds are instead lent out to other customers in the form of loans. This system is generally efficient but creates a vulnerability to bank runs, since not all depositors can withdraw their money at the same time without causing significant financial disruption.