President Joe Biden has vetoed H.J.Res. 109, a congressional resolution that would have overturned the Securities and Exchange Commission’s current
President Joe Biden has vetoed H.J.Res. 109, a congressional resolution that would have overturned the Securities and Exchange Commission’s current
A checking account is a liability to a bank because it must be prepared to pay out the balance if the account holder decides to withdraw. Forcing banks to treat crypto holdings as liabilities makes the bank hold more in reserves in order to be better prepared for a bank run.
This sounds good to me. To my understanding, banks in the US do not actually have to hold any money in reserve for it’s customers as of… 2020?
Hey I found the FED posting! https://www.federalreserve.gov/monetarypolicy/reservereq.htm
This is my favorite part “As announced on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions.”
Happy Halloween kids. 😈
Yeah that’s correct. It’s pretty wild that things work this way. Most people think that we still have fractional reserve banking, which is where the bank has $1 in reserve and they lend it to many borrowers simultaneously. With no reserve requirement they can essentially loan money that doesn’t exist. Banks want to avoid succumbing to a bank run where too many clients make withdrawals at the same time. But essentially they operate like a retail business that determines how many products to keep on hand in order to meet demand on any given day. Bank loans create both a credit (to the borrowers account) and a debit in the bank’s main ledger, the debit is a liability as we discussed, the bank must be prepared to pay.
Banks are limited by their ability to find qualified borrowers who will repay their loans.