> At the moment of deposit, the funds become the property of the depository bank.

> Thus, as a depositor, you are in essence a creditor of the bank. Once the bank accepts your deposit, it agrees to refund the same amount, or any part thereof, on demand.

At least in New York state, the answer to the first question is no. I imagine it's the same everywhere else.

You are right in practice that the FDIC guarantees small deposits.

If it was just a legal contract, in the worst case you'd have to sue to hold them to account.

(On the other hand, politics can change from one day to the next; but contracts are harder to unilaterally change.)

Even when you physically own money, let's say physical cash/bills, the counterparty could default. For instance in Nov 2016 govt of India declared that about 90% of currency in circulation stop being money within a certain deadline.

In my mind whenever I try to analyse money or different forms of money I always think in terms of counterparty.

> Money always has a counter-party [...]

That's mostly true for most forms of money. But not technically true for gold coins or bitcoin.

> For example, last year treasury announced sanctions after Ukraine conflict where they froze Russian USD assets. This is essentially the govt of United States deciding to not honour their commitment.

That's sort-of true. It's a bit simplified. The treasury isn't typically the counterparty for these commitments. What they did was ban other entities from honouring their own commitments.

So eg if a bank in Singapore didn't want to lose access to the USD ecosystem, they had to cease honouring their commitments to certain Russian entities.

That's independent of whether those commitments were specified in USD, Singapore dollars, Euros, British Pounds or pork bellies.

> But not technically true for gold coins

In so far as gold is used as money one is indeed relying on rest of humanity/society to accept it in exchange for whatever you need. Granted that for most (all?) of their existence, civilised humans have accepted gold as money because of its use as jewellery and its attractive qualities. But there's still a possibility that some tribe/community will refuse to accept gold as money as they don't have any use value of it.

In my mind, money is a promise or a contract which says here's a "thing" I'll give you in exchange for goods or services. The other party could always walk away from that contract or decide to not honour that promise.

Gold/cattle etc., have worked as money because they have an intrinsic use value which one could fall back to if it stops working as money.

Which brings me to the next point.

> ..or bitcoin.

I could never understand the intrinsic use value of Bitcoin. People think of it as store of energy or whatever but what is the intrinsic use of Bitcoin? ETH at least is used as a currency to get work done on Ethereum chain so that is its intrinsic use value.

I'd need to look that up. But I don't think Russian entities directly held assets at the federal reserve? It's mostly about the commitments of third parties?

> In so far as gold is used as money one is indeed relying on rest of humanity/society to accept it in exchange for whatever you need.

Hence my use of the term 'technically'. Yes, the industrial uses for gold are relatively limited. So its value is mostly (but not totally) a social construct.

However imagine for a second coins made of something that has enormous industrial value but hasn't acquired any social value (yet). Eg coins made of graphene or so? (Not sure about a specific example.)

In any case, there's no contractual counterpart for gold. It's an expectation, but no on in obligated to live up to that obligation.

> In my mind, money is a promise or a contract which says here's a "thing" I'll give you in exchange for goods or services. The other party could always walk away from that contract or decide to not honour that promise.

For proper contracts, there would be contract penalties. Eg if your bank refuses to pay out cash when asked.

> I could never understand the intrinsic use value of Bitcoin. People think of it as store of energy or whatever but what is the intrinsic use of Bitcoin? ETH at least is used as a currency to get work done on Ethereum chain so that is its intrinsic use value.

Network effects aren't good enough for you?

All publicly issued stocks in the US are technically owned by one obscure New York company. Your broker has a contractual relationship with them, and you have a contractual relationship with your broker.

See https://en.wikipedia.org/wiki/Cede_and_Company

Technically, you don't own any (public) shares.

These days the value of bills is solely in being legal tender; that is, an authentic bill can be used for satisfaction of any court-ordered debt. That's not the same thing as requiring people to transact with you using those bills. But if someone sued you in court and gained a judgement against you, then you could use those bills to satisfy the judgement. Example: you ran away with a candy bar after the clerk refused to take your dirty dollar bill. They sue you. The court orders you to pay the store $1, which you can satisfy with an authentic $1 note, even the original dirty note.

Maybe the clerk refused the bill because the store only accepts Bitcoin payments. I'm not sure, but the judgment could in theory include whatever costs the store incurred (if any) by being forced to take cash, which you would could also pay in cash. Because ultimately whatever damages or costs were incurred can be satisfied by the jurisdiction's legal currency, in which such damages and costs are also typically denominated.

Depositing money is lending money. It's presented like some special thing, but at the end of the day you no longer have your dollar, you have an IOU for a dollar issued by the bank. Yes, you have a deal with the bank that they will give you your money back whenever you want.

Now normally there's no point in mincing words, you have 50K at the bank, whatever. But if the bank fails, you still don't have the money in your hands, you are still owed it. What normally happens when a business can't pay back its debts is there's a bankruptcy procedure and everything is frozen until a bankruptcy lawyer parachutes in to handle things. Now keep in mind they are bankrupt because they don't have a way to pay back everyone, so there are laws about how your IOUs are settled. This is called a haircut, because chances are the creditors will not get back the full amounts they're owed. (In rare cases a bankrupt business somehow manages to sell its assets for more than the liabilities.)

If it's a bank, there's insurance schemes in various countries to help out the depositors.

But the deal is basically that, you are lending money to the bank, and they are lending to other people eg mortgages, business loans, overdrafts, etc.

Getting back to your question, there's not a whole lot of meat on the "what does the law say" bone. SVB is dead, carcass is divided up between the creditors.