4 ms·
> As of 2020, the Federal Reserve lowered reserve requirements to ZERO Because it's no longer the favoured mechanism. Large banks in the US still have capitali
by Nursie 4y ago
> As of 2020, the Federal Reserve lowered reserve requirements to ZERO
Because it's no longer the favoured mechanism. Large banks in the US still have capitalisation requirements, and there are various other measures, they're just no longer required to keep a certain percentage specifically in a federal reserve account.
https://www.federalreserve.gov/supervisionreg/large-bank-capital-requirements.htm https://www.federalreserve.gov/supervisionreg/large-bank-cap...
- EGreg 4y agoSeems to me the main constraint in the decentralized world is that the bank will have to pay higher interest to other banks, if their own loans start to default at a greater rate than the money being deposited with them. If people stop depositing with that bank, or withdraw their money, or their loans start to default, then the bank's balance sheet will become lopsided and they'll have to pay higher interest to other banks. Is this what LIBOR is basically?
- Nursie 4y agoHonestly I have no idea! I did listen to a podcast about LIBOR and the various criminal convictions around it sometime earlier this year, and I swear I understood it for a few minutes… but it’s gone now!