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I'd be curious to know how much of the "overage" is from businesses that would be fine with narrow banking at the Fed. The obvious downside is that you still n
by boulos 4y ago
I'd be curious to know how much of the "overage" is from businesses that would be fine with narrow banking at the Fed.
The obvious downside is that you still need regular banks and financial institutions for loans, but for large operating accounts for many companies you just want something you can spend and won't disappear. And presumably this is why the Fed doesn't permit narrow banking: major deposits would dry up, loan rates would have to be much higher, and so on.
- JumpCrisscross 4y ago> for large operating accounts for many companies you just want something you can spend and won't disappear Every corporate treasurer worth their salt manages a portfolio of short-dated bills, commercial paper and repos for this purpose. Maybe now this knowledge is obsolete. But it’s always been there, at small sizes, via Treasury Direct.
- boulos 4y agoSure, but when does that start? What set of small businesses have >$1M of operations per month and nobody to manage that? Or even just an owner who wants to "keep it all in cash" instead?