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How is the panic "unnecessary"? Are you saying that if your personal bank told you that you could get your money back, but just not right now, that you'd be ok
by gr1zzlybe4r 4y ago
How is the panic "unnecessary"? Are you saying that if your personal bank told you that you could get your money back, but just not right now, that you'd be ok with that?
Liquidity is a key feature of banks and it relies on trust. Without it, they have nothing. Trust isn't some ancillary thing for a bank. It is almost everything.
- anamexis 4y agoDoes that means panics are necessary at every other bank, seeing as how their liquidity is similar (or worse)?
- JumpCrisscross 4y ago> every other bank, seeing as how their liquidity is similar Source? SVB had an unusual amount of long-duration assets. Most banks maintain a buffer of low-yielding, highly-liquid on-the-run Treasuries.
- nostrebored 4y agoI would not find it surprising if bank liquidity was actually historically low, especially considering that many banks do maintain buffers _of the same covaried assets_ and that banks _induce covariance when they choose to use an asset class for liquidity_. Maybe ZFRB was just a really, really bad idea.
- borski 4y agoNot anymore. Very few maintain this, JPM being the notable exception. The only difference is that panic set in and there was a bank run, largely led by VCs telling startups to pull their money.