The central issue that causes bank runs and panics is when banks withhold deposits from creditors (option B).
Bank runs occur when troubles in one bank makes depositors panic that the troubles would spread to other finaniclal institutions. As a result, there would be a wide spread withdrawals from other banks. Eventually, the banks would not be able to meet all the withdrawal requests of customers.
One of the ways that have been used to minimise bun runs is the establishment of a body that insures the deposits of a customer up to a certain amount. The insurance of deposits would give customers the trust that they would not lose the amounts they deposited in the banks.
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