Re:Why America will soon see a wave of bank mergers
by abm53 on Tuesday May 02, 2023 @03:06PM
(#35792572)
The problem is that bank lending is the main form of money creation in the economy.
If retail banks switched en mass to backing deposits 1-to-1 with Fed reserves then the Fed would quickly take strong action to disincentivise this strongly contractionary effect.
They have plenty of legal tools to do this (e.g. IORB rate). They don’t need to resort to not giving out licenses.
If retail banks switched en mass to backing deposits 1-to-1 with Fed reserves then the Fed would quickly take strong action to disincentivise this strongly contractionary effect.
They have plenty of legal tools to do this (e.g. IORB rate). They don’t need to resort to not giving out licenses.