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Well sure, but one could theoretically imagine banks which are prohibited to lend money from their customers' current accounts and only make loans based on thei
by PeterisP 4y ago
Well sure, but one could theoretically imagine banks which are prohibited to lend money from their customers' current accounts and only make loans based on their CDs - and one aspect of that is that they'd have to offer much better terms for CDs since they would be in much higher demand.
- twblalock 4y ago> and one aspect of that is that they'd have to offer much better terms for CDs since they would be in much higher demand. Why? CDs are insured by the FDIC. That gives people the same amount of confidence in all CDs no matter what bank they get them from.
- ashwagary 4y agoWell, if they can only lend from funds in the CD pool, how else would they encourage clients to put more money in that pool? Better terms right?