So banks are nervous scared to death! Circle and Tether will replace banking???
Yes, essentially stablecoins will wind up killing retail / commercial banks for the most part. We are moving back to full-reserve banking.
The lack of any meaningful interest payments from your checking account is exasperated by very low reserve requirements.
Current Bank = Reserve Requirement of say 50/1. Gets a $1 deposit. Buys .02 Treasury. Earns interest on .02 Treasury and allocates a portion of that back to depositor.
Stablecoin Bank = Reserve Requirements of 1/1 by law. Gets a $1 deposit. Buys $1 of US Treasury. Earns interest on $1 Treasury and allocates a portion of that back to depositor.
The net-result is as follows:
Depositors will receive more in interest than they currently do.
The gov prefers Stablecoin banks to Current banks by 50x because they buy 50x as much treasuries.
Result:
The retail system will pivot to stablecoin banking
Yes, essentially stablecoins will wind up killing retail / commercial banks for the most part. We are moving back to full-reserve banking.
The lack of any meaningful interest payments from your checking account is exasperated by very low reserve requirements.
The net-result is as follows:
Result: