4 ms·

i don’t get how you can say corporate paper is part of your reserve. it’s very illiquid and you could be screwed if there’s a bank run. it also has duration ris

by ffggvv 5y ago

i don’t get how you can say corporate paper is part of your reserve. it’s very illiquid and you could be screwed if there’s a bank run. it also has duration risk. the whole point of a tether is it should be backed 1 for 1 by cash. that’s like saying my coin is backed by gold and then trading that gold for us treasuries

davidgerard 5y ago
Before the 2008 financial crisis, a lot of banks listed commercial paper as assets. The highest-quality, highest-rated commercial paper! Backed by solid assets, such as mortgage-backed securities!