What I think needs to be grasped is that conteporary banks are not the same animal as in 1932.

The growth of financial instruments is such that the real economy is dwarfed.

There are indeed banks in trouble. Stress tests are amended to give them a pass. In such an environment northern rock debacle has taken place.

So, what does it mean when people start taking out cash as opposed to paying by cards and pin?

It simply.means that liquidity needs to be provided. And the system is such that is can sustain it.

In my country cash transaction account for 30% of the total. When it grows to 35, which basically means people taking their currency out of the system for just a while, this currency is deposited into the banks again by the vendors, as they need to pay their creditors.

In Greece the situation was dire. Measures were put in place, such as limiting the amounts that could be withdrawn to a Max of 50 Euros.

Banks are at the top of the game and have every means to curb any emergency.

Best is to retrieve cash over time and spent it only where the money keeps circulating as cash. This latter item, restaurants, supermarkets, market sellers, etc also need to be on board with such a movement. Otherwise it is only a deference in time untill the currency ends up with the banks.