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There's a 2014 paper that describes this dynamic. Clients want deposits (bank liabilities) that act like cash, but they are backed by assets that have fluctuati
by yellowstuff 4y ago
There's a 2014 paper that describes this dynamic. Clients want deposits (bank liabilities) that act like cash, but they are backed by assets that have fluctuating values. Banks need to be "optimally opaque" to make this work.
https://economics.sas.upenn.edu/pier/working-paper/2014/banks-secret-keepers https://economics.sas.upenn.edu/pier/working-paper/2014/bank...
- bentcorner 4y agoDo they really? Isn't it only the interest rate that decides how much risk a bank wants to take on? Couldn't I could open a bank, stuff your cash into my vault and charge you a negative interest rate to pay for guards.
- s1artibartfast 4y agoYou could, but that is not what "clients want".
- jsjohnst 4y agoI’d definitively signup if that was available, just ideally as a monthly fee vs a negative interest rate. Just like I’ll pay for my content over it being “free” with ads and/or worse dark patterns.
- deleted 4y ago[deleted]
- lotsofpulp 4y agoWhich clients are these? Wouldn’t there be a set of clients, such as businesses trying to make payroll, who simply want 100% guarantees of money being there.
- deleted 4y ago[deleted]
- fineIllregister 4y agoSounds impossible. If the money is just shoved in a vault, the bank has to come up with money for rent/taxes, payroll for someone put the money in and take it out, etc. If the money is guaranteed to be there, then it can't be 100% of it.
- beambot 4y agoOr we could just have a Fed Bank, where the dollars act like cash because they are cash... Upshot: No more middleman.