Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Well, you could demand full reserves for the entire liability side. But I'm not sure why you would. The purpose of demanding full reserves for insured deposits is that it allows you to cleanly and expeditiously separate the parts of the bank that mustn't fail (checking accounts and revolving credit) from the parts that can and should be put through ordinary bankruptcy proceedings when the bank is insolvent.

Any further reserves serve only to protect suckers in the money markets from being separated from their money. And, suckers being suckers, they will presumably find another way to go about losing their money if you block this avenue.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 10th, 2011 at 02:34:18 PM EST
[ Parent ]

Others have rated this comment as follows:


Occasional Series