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(Being serious) should banks as we know them even exist, then? Maybe having them fill a role as an intermediary makes sense, but now that we can securitize loan
by dehrmann 4y ago
(Being serious) should banks as we know them even exist, then? Maybe having them fill a role as an intermediary makes sense, but now that we can securitize loans, why does opaquely connecting short-term lenders directly with long-term borrowers make sense?
- bravo22 4y agoI am going to assume that you are OK with fractional reserve banking so I won't talk about why that is necessary as a function in an economy. If I understand you correctly, you're basically saying why use a bank versus something else? My answer would be because for vast majority of retail bankers it doesn't matter. Same reason many would use Gmail vs self-host. They want to put their money somewhere and ensure that it will be there when they need it. As a society we have a framework around that and we provide deposit insurance and we call the orgs who take your deposit, give you an IOU (in the form of an account balance) then lend a fraction of it to others a bank. For significantly larger sums no I don't think it makes sense to use a bank and most large corps have a treasury that specifically deals with that.