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> So market value is only relevant if they need to sell before maturity. Which is exactly what needs to happen when depositors ask for their money back.
by asimpletune 4y ago
> So market value is only relevant if they need to sell before maturity.
Which is exactly what needs to happen when depositors ask for their money back.
- Retric 4y agoNot typically. Banks generally have liquid reserves to handle significant fluctuations in deposits. If that’s insufficient they have incoming cash flow and the option to borrow money to make up the difference rather than instantly selling assets. Thus in practice extracting 5% over a week is fine but there’s a threshold that will kill any bank.