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> 3. Because you cannot actually just park billions of dollars in the national reserve bank and collect interest on it. Actually you can, it's called Interest
by H8crilA 7y ago
> 3. Because you cannot actually just park billions of dollars in the national reserve bank and collect interest on it.
Actually you can, it's called Interest On Excess Reserves (IOER) in the US, which has been the only short term rate enforcement mechanism of the FED since the crisis days. Till that whole repo thing happened, just recently.
https://en.wikipedia.org/wiki/Excess_reserves https://en.wikipedia.org/wiki/Excess_reserves
The rest is true though.
- YawningAngel 7y agoThe Fed is not obligated to allow you to open an account, and in such a case it very likely would not allow such a thing: https://www.bloomberg.com/opinion/articles/2019-03-08/the-fed-versus-the-narrow-bank https://www.bloomberg.com/opinion/articles/2019-03-08/the-fe...
- H8crilA 7y agoI meant it does allow banks to do it. And from what I've read banks can arrange a FED deposit for a non-bank, charging a few bps of profit for the service. Also you can always just buy short term treasuries. There's even an ETF for that ($BIL) which charges 14 bps. But yeah no chance that a big "fuck compliance" scheme like Tether could easily pull it off.