3 ms·

I just don't see your reasoning. By what mechanism that is not provided today would the banks stop doing what they do today? What mechanism would control the ex

• lifty 8y ago
  Bitcoin and other cryptocurrencies are easier to store securely compared to bunches of cash, which would lead to less pressure to store them in a bank. Deposits would be incentivised using interest rates (set by the market). That and the banks not being able to create money would lead to them being more dependent on deposits; this in turn would put more pressure on banks that exhibit risky behaviour and favour banks that keep a healthy balance sheet. And why would there be more pressure to adjust risky behaviour? Because people would take their money out of banks that exhibit that behaviour, which would re-inforce behaviour that has the right ratio of risk/return. This does not happen now because banks don't need almost any deposits to make profit. This risk adjustment already happens in financial sectors that have skin in the game. For example, if a hedge fund looses money, sooner or later people will take their money out of it.