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Banks that use fractional reserve should still have balanced assets and liabilities. It is just that some of their money is tied up in loans to be paid back ins
by ufo 8y ago
Banks that use fractional reserve should still have balanced assets and liabilities. It is just that some of their money is tied up in loans to be paid back instead of liquid cash. If everyone the bank loaned money to paid back there would be enough cash to allow all the customers to fully withdraw their accounts.
Bitfinex, on the other hand, is just outright insolvent.
- dTal 8y agoAh, so there is a difference. Thank you for clarifying. I wish I had phrased my post as a question - as a statement it seems rather unpopular...
- ufo 8y agoYou would be surprised how often other people use that exact argument but as a statement they say full of conviction instead of a question :) That might be the source of the confusion here.
- deleted 8y ago[deleted]
- tptacek 8y agoIt also helps that banks are insured federally.