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There’s no way to provide risk free returns on demand deposits, other than the government just deciding to give away money. Hedging doesn’t magically eliminate
by bradleyjg 3y ago
There’s no way to provide risk free returns on demand deposits, other than the government just deciding to give away money. Hedging doesn’t magically eliminate risk at zero cost.
- lesuorac 3y agoSure, in the technically true way. However, in practical terms banks have done a great job of making loans that get repaid more often than not. People are ok with having a bank that pays 0% interest and uses the difference between loan's rate and the real rate to operate successfully; bankers are not ok with leaving money on the table.