3 ms·
Failing a rescue from a central bank, you could have a bank run. I still don’t know why the ordinary payments system has to be coupled with hedge funds and der
by viburnum 7y ago
Failing a rescue from a central bank, you could have a bank run.
I still don’t know why the ordinary payments system has to be coupled with hedge funds and derivatives and whatnot. It should be completely separate. It’s like having your car explode because a cup holder got a crack.
- benj111 7y agoSo it could be as bad as that? It's kind of why I asked the question, but I thought there would be a rule or process or something. It's 'nice' how occasionally you get a glimpse at the gaffer tape and baling twine holding the world together.
- cm2187 7y agoBut that's what central banks are there for, to provide emergency liquidity to regulated banks in order to support the stability of the financial system. Also do consider that most contracts include grace periods for technical glitches. But the first line of defense is the enormous amount of cash and liquid assets banks are required to hold to ensure they remain liquid.
- coliveira 7y agoThe system is coupled with hedge funds and etc. because the money they use come from banks. Goldman Sachs and others don't have the money to maintain all their obligations, it all comes from other banks that loan the required funds. When there are problems in money part of the banking system, everything goes down.
- viburnum 7y agoYeah, that’s the problem. They should be separated.