Re:Mass of Transactions Leaving Crypto.com Wallets
by nemothekid on Monday November 14, 2022 @07:23PM
(#33603477)
>I am not sure there is a clear distinction between the two for fractional reserve banking ?
If your assets are real and not shitcoins, there is a difference. If I have $200 in my bank, the bank takes $100 from me and buys AAPL stock (and adds their own cash); and then I go to withdraw my $200 on Saturday:
1. The bank is illiquid. I want $200 cash, but the bank only has $100 and 1 AAPL stock.
2. The bank is (likely) solvent. Unless AAPL crashes below $100 on Monday morning they are likely good for the money (AAPL, a blue chip stock, is unlikely to crash below $100) on monday morning. In this case a lender of last resort will step in (like the Fed) and bank may pay some premium for an emergency loan.
If your assets are real and not shitcoins, there is a difference. If I have $200 in my bank, the bank takes $100 from me and buys AAPL stock (and adds their own cash); and then I go to withdraw my $200 on Saturday:
1. The bank is illiquid. I want $200 cash, but the bank only has $100 and 1 AAPL stock.
2. The bank is (likely) solvent. Unless AAPL crashes below $100 on Monday morning they are likely good for the money (AAPL, a blue chip stock, is unlikely to crash below $100) on monday morning. In this case a lender of last resort will step in (like the Fed) and bank may pay some premium for an emergency loan.