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Are you saying that individual Swiss banks are currently free to make up their own reserve requirements? In the American system, as I understand it, the Federal
by dpatru 8y ago
Are you saying that individual Swiss banks are currently free to make up their own reserve requirements? In the American system, as I understand it, the Federal Reserve (the US central bank) sets reserve requirements which the banks must follow. I thought this was how the Swiss system worked also.
If the Swiss central bank already sets reserve requirements, what would this proposal do?
- kgwgk 8y agoEliminate the reserve requirements, which would no longer be required because banks would not hold client’s on-demand deposits on their balance sheets at all. They would be held on the central bank’s balance sheet.
- spiralx 8y ago> Are you saying that individual Swiss banks are currently free to make up their own reserve requirements? No, but bank lending is not made from customer deposits or bank reserves - lending occurs first, then reserve requirements are met afterwards. See for instance this research paper from Standard & Poor's: Repeat After Me: Banks Cannot And Do Not "Lend Out" Reserves https://www.kreditopferhilfe.net/docs/S_and_P__Repeat_After_Me_8_14_13.pdf https://www.kreditopferhilfe.net/docs/S_and_P__Repeat_After_...