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Digital coins and banks don't mix well, as the recent bank runs have shown. The entire premise of banks is that they know their customers withdrawal and deposi
by machina_ex_deus 4y ago
Digital coins and banks don't mix well, as the recent bank runs have shown.
The entire premise of banks is that they know their customers withdrawal and deposit patterns, which are usually independent and not very correlated, and they can invest the money in the mean time.
But stablecoins are extremely unstable from a bank point of view. They can get withdrawal spikes, which result in bank runs. There's no way around that.
- lxgr 4y ago> The entire premise of banks is that they know their customers withdrawal and deposit patterns, which are usually independent and not very correlated, and they can invest the money in the mean time. Usually, but not nearly always – see SVB. But then again, there is nothing that says a stablecoin issuer (or bank for that matter) absolutely needs to lend long and borrow short: They can just as well park their entire deposits at the central bank.