[jerguismi]

Yeah they are loans, like apartment loans. The loan might be for something like 20 years and might default.

In my opinion having assets like house loans is pretty far away from being "backed". If enough customers want their money out, bank can go bust. If they have lent the money to wrong people, they also can go bust. Banks go bust now and then.

[Scoundreller]

The bank can sell the loan off to another bank if it needs cash now. It could be at a loss, or it could be at a profit depending on how interest rates chgd since issue.

It takes a lot for a bank to go bust when they can do that with their assets if they go through their reserves.

The value of their loans may be good enough to sell shares to investors instead of selling to another bank.

The trick is to loan out to lots of different people so any one group being “wrong” is made up with profits.

We’re seeing none of that with this stablecoin. They’ve put a huge chunk of money into a ???bank(s) in a ??? country, at best.

What’s your definition of “backed”? Banks will gladly keep your fiat in an insured safety deposit box, but they’re going to charge you for the privilege. And the government will just inflate away your attempt at deflation.

[jerguismi]

Well, banks can give out loans too eagerly to wrong people meaning that the resell value of the loan can be much less than the value of the loan. In fact nowadays it is not that rare for bonds to have negative returns.

Banks can fuck up and go bust. It doesn't happen often but it happens.