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> we have checked on 84% of 'em" pile of smelly things, which are in turn... For the posterity of this thread American banks are no longer required to hold any

> we have checked on 84% of 'em" pile of smelly things, which are in turn... For the posterity of this thread American banks are no longer required to hold any reserve requirements at all[1]. Though I guess that is a "different" issue depending on who you ask here. Ask yourself this - can everyone in the country take their money out at the same time For these shitty stablecoins: nearly everyone For the actual money you use everyday: Maybe 2-3% of people can cash out of the system properly. A system built on trust works until it doesn't. [1] https://www.federalreserve.gov/monetarypolicy/reservereq.htm https://www.federalreserve.gov/monetarypolicy/reservereq.htm

drc500free 4y ago
Which is why FDIC insurance is a thing.
- Grimburger 4y ago
  It's financial snake-oil though. You do not want to any own dollars if it ever gets invoked on a big enough scale with a major bank. They simply do not have your money nor could they realistically insure every persons savings if their was bankruns, it's a system built upon nothing more than trust. When that trust dwindled in recent times, they brought in FDIC to create more trust out of thin air.
rchaud 4y ago
Depositor insurance is why people don't try to take out all their money at the same time. Stablecoins don't offer that. They have their own stabilizing mechanism where in a crisis, the peg collapses so quickly that it's not even worth trying to take any out after considering peak traffic tx fees.
- lazide 4y ago
  Bwaha, you had me in the first half. Glorious.
  - mywittyname 4y ago
    What's so funny? The FDIC has a track record of payouts and they keep meticulous of every bank they insure, going back to the program inception in 1933.
    - lazide 4y ago
      What I found funny (but apparently was easily misunderstood) is how the poster I replied to was talking so seriously and correctly about stabilizing mechanisms in real (as in world) currencies in the first half, then gave the details on the ‘stabilizing’ mechanism of the ‘stable coins’ - which is they collapse and die if the gap gets too big, and it’s impossible to ‘withdraw’ without spending more on tx fees than you’d get out. Which, I believe is correct and also about as stabilizing as a deadman’s switch on an explosive vest held by an gorilla. Which, hey, gorillas are pretty smart, if they know they aren’t supposed to let go, they’ll try. But it’s not a good idea to spend much time in their vicinity in such a situation. I’d assumed it was an attempt at dry humor, straight man/ad-absurdism style, which I appreciated.
jcranmer 4y ago
> For the posterity of this thread American banks are no longer required to hold any reserve requirements at all[1]. That is misleading. Banks are no longer required to hold a certain fraction of their deposits in their bank account at a Federal Reserve bank--that's the reserve requirement that was reduced to 0%. Keep in mind that only money in the bank account qualifies as reserves that requirement; a literal pile of dollar bills would contribute not one cent. Instead, banks are required to keep on hand sufficient equity for a percentage of their risk-weighted assets--money that, if the assets go to 0, can be raided to make up the losses. The requirement here starts at I believe 8%, and increases if you're a more important bank. (If I'm computing it correctly, Tether has disclosed a capital ratio of approximately 0%, FWIW. Were Tether actually held to the same standards as a bank, Tether would be considered dangerously undercapitalized if not outright insolvent.)
- Grimburger 4y ago
  > are required to keep on hand sufficient equity for a percentage of their risk-weighted assets Define "sufficient", give it an actual number... > Tether has disclosed a capital ratio of approximately 0% NYAG accounted for 90% of their assets with that big case last year didn't they?
  - tptacek 4y ago
    You didn't say "banks are no longer required to keep sufficient reserves". You said they were no longer required to keep reserves at all.
rlucas 4y ago
This is misleading to those who read "plain English" meanings and not familiar with jargon. Banks call "Capital" or "Equity" the unencumbered safe assets like cash they hold. Banks do have strict Capital requirements. The "reserve" requirement going to zero is different.

drc500free 4y ago

Which is why FDIC insurance is a thing.

Grimburger 4y ago
It's financial snake-oil though. You do not want to any own dollars if it ever gets invoked on a big enough scale with a major bank. They simply do not have your money nor could they realistically insure every persons savings if their was bankruns, it's a system built upon nothing more than trust. When that trust dwindled in recent times, they brought in FDIC to create more trust out of thin air.

rchaud 4y ago

Depositor insurance is why people don't try to take out all their money at the same time. Stablecoins don't offer that. They have their own stabilizing mechanism where in a crisis, the peg collapses so quickly that it's not even worth trying to take any out after considering peak traffic tx fees.

lazide 4y ago
Bwaha, you had me in the first half. Glorious.
- mywittyname 4y ago
  What's so funny? The FDIC has a track record of payouts and they keep meticulous of every bank they insure, going back to the program inception in 1933.
  - lazide 4y ago
    What I found funny (but apparently was easily misunderstood) is how the poster I replied to was talking so seriously and correctly about stabilizing mechanisms in real (as in world) currencies in the first half, then gave the details on the ‘stabilizing’ mechanism of the ‘stable coins’ - which is they collapse and die if the gap gets too big, and it’s impossible to ‘withdraw’ without spending more on tx fees than you’d get out. Which, I believe is correct and also about as stabilizing as a deadman’s switch on an explosive vest held by an gorilla. Which, hey, gorillas are pretty smart, if they know they aren’t supposed to let go, they’ll try. But it’s not a good idea to spend much time in their vicinity in such a situation. I’d assumed it was an attempt at dry humor, straight man/ad-absurdism style, which I appreciated.

jcranmer 4y ago

> For the posterity of this thread American banks are no longer required to hold any reserve requirements at all[1]. That is misleading. Banks are no longer required to hold a certain fraction of their deposits in their bank account at a Federal Reserve bank--that's the reserve requirement that was reduced to 0%. Keep in mind that only money in the bank account qualifies as reserves that requirement; a literal pile of dollar bills would contribute not one cent. Instead, banks are required to keep on hand sufficient equity for a percentage of their risk-weighted assets--money that, if the assets go to 0, can be raided to make up the losses. The requirement here starts at I believe 8%, and increases if you're a more important bank. (If I'm computing it correctly, Tether has disclosed a capital ratio of approximately 0%, FWIW. Were Tether actually held to the same standards as a bank, Tether would be considered dangerously undercapitalized if not outright insolvent.)

Grimburger 4y ago
> are required to keep on hand sufficient equity for a percentage of their risk-weighted assets Define "sufficient", give it an actual number... > Tether has disclosed a capital ratio of approximately 0% NYAG accounted for 90% of their assets with that big case last year didn't they?
- tptacek 4y ago
  You didn't say "banks are no longer required to keep sufficient reserves". You said they were no longer required to keep reserves at all.

rlucas 4y ago

This is misleading to those who read "plain English" meanings and not familiar with jargon. Banks call "Capital" or "Equity" the unencumbered safe assets like cash they hold. Banks do have strict Capital requirements. The "reserve" requirement going to zero is different.