Re:Tether reserves backed by 2.9% cash
by atq2119 on Friday May 14, 2021 @04:14AM
(#27151957)
Sibling comments express justified disbelief at this question, but just in case: in our modern monetary system, reserve requirements aren't the "last resort" against bank runs. The central bank will jump in and provide the required liquidity to prevent a bank run as a last resort, and (since it is the entity which ultimately runs the monetary system) the central bank is by definition always able to do so. For a bank to fail in the modern system, it has to fail its capital requirements, which is a very different story (the keyword you'd be looking for here is the Basel regulations).
Tether cannot fall back to a central bank, so the cases are completely incomparable.
Re:Tether reserves backed by 2.9% cash
by atq2119 on Saturday May 15, 2021 @02:12AM
(#27162866)
Well, they don't print the USD. But you're right, perhaps a better analogy for what people mean is a central bank trying to maintain a currency peg. Which also often ends badly...
Tether cannot fall back to a central bank, so the cases are completely incomparable.