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> The majority of markets don't care if it is 100% backed, like they don't care when their bank does fractional reserve Fractional reserve banks' deposits are
by beefield 7y ago
> The majority of markets don't care if it is 100% backed, like they don't care when their bank does fractional reserve
Fractional reserve banks' deposits are backed more than 100% with more or less liquid assets. That's why nobody cares if a bank does fractional reserve. With tether there is no reason to believe there is even close to 100% backing. Unless you count as a reason an unverified claim that they are backed.
- dwild 7y ago> with more or less liquid assets What's more liquid than cash itself? I also have an hard time it's backed with MORE value and whether that value is fictional or not. The 2008 crash has shown that it wasn't actually backed by much.
- beefield 7y ago"Or less" Any bank with assets worth less than liabilities is bankrupt. You may not believe it, but regulators that allow bank to operate and any one holding bank equity with stock price above zero believes that bank's assets are worth more than liabilities. There you are right that it is possible that tje value of the bank's assets may decline fast, but normally the assets exceed deposits quite significantly as deposits are amongst the highest priorities, so other liabilities (senior debt and equity) act as buffers as well.
- beefield 7y agoOf course, when I say liabilities, I mean non-equity.