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So what you mean to say is that the Swiss will now create a system where Swiss banks are required to have a tiny and fully controlled "overseas" (about 5 cm ove
by iofj 11y ago
So what you mean to say is that the Swiss will now create a system where Swiss banks are required to have a tiny and fully controlled "overseas" (about 5 cm overseas preferably) subsidiary that "really"/legally originates all the loans ...
Because it would still be legal for banks in every other country to loan out Swiss dollars with fractional reserve. (Or even with 0 reserve)
I bet France and Germany will soon be voting a 2% foreign bank tax and send a box of flowers to every Swiss citizen as thanks. Nah doesn't sound realistic. They're governments. They'll never send thanks to anyone for money they suddenly can steal.
- coldtea 11y agoThose damn Swiss, what they know about banking, right?
- lxgr 11y ago>Because it would still be legal for banks in every other country to loan out Swiss dollars with fractional reserve. (Or even with 0 reserve) There is more to money creation than just extending loans and crediting customer accounts. In order for such a debited balance to be actually useful, a bank needs to be able to settle interbank payments. Interbank settlements are usually performed using central bank reserve accounts – and the central bank is free to limit access to that system only to 100% reserve compliant parties.
- iofj 11y agoTrue. However ... any central bank is free to do that in any currency they please. So the ECB can do it for Swiss Francs today, for instance. If you now proceed to say that that is lunacy ... I'd agree with you. But it's still how it works.