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1:1 cash/cash-equivalent reserves, which means the best they can do is things like US treasuries / money-market funds Whether US Treasuries are "cash e
by ArtTimeInvestor 1y ago
1:1 cash/cash-equivalent reserves, which means the
best they can do is things like US treasuries /
money-market funds
Whether US Treasuries are "cash equivalent" is debatable / depends on the specifics. A dollar is worth a dollar tomorrow. A 10-year US treasury might not.
Are you saying the holder of a stable coin is not taking a higher long-tail risk than the holder of a dollar in a checking account of a bank?
- krrishd 1y agoYeah that's a good flag. To be even more specific though, "cash equivalent" and the sorts of treasuries that implies are specifically short-duration ones (ie. this cash cannot be parked in a 10-year US treasury either) Cash equivalents are short-term commitments "with temporarily idle cash and easily convertible into a known cash amount" https://en.wikipedia.org/wiki/Cash_and_cash_equivalents https://en.wikipedia.org/wiki/Cash_and_cash_equivalents