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> By "deposits" I was understanding "deposits backed by holdings at the central bank". Ok. That would be reserves. But it's not like some deposits are backed a
by kgwgk 4y ago
> By "deposits" I was understanding "deposits backed by holdings at the central bank".
Ok. That would be reserves. But it's not like some deposits are backed and others are not (leaving aside the existence of different kinds of deposits) - what you have is a total amount of deposits and a total amount of reserves.
- tome 4y agoYes, I understand that. But I don't understand why we couldn't have a system whereby, to cover payroll, a bank creates a loan to each company every payroll day, transfers cash to the (FDIC insured) bank accounts of employees, and then liquidates some of the company's T-Bills over the next couple of hours or days to cover it. That seems like a way of making sure everyone's paid without companies having to risk > $250k balances at any time.