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by village-idiot
2614 days ago
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A fractional reserve bank is only fractionally liquid, the rest is invested in a variety of interest bearing loans. Obviously there’s always a risk of many loans not being repaid or sudden rushes for withdrawal, hence all the regulation and the FDIC. Tether is admitting that they only have enough cash and securities to cover 74% of the outstanding tether balance. This isn’t fractional reserve, this is just straight up insolvency. If your bank only has enough cash and mortgages to cover 74% of their deposits, then it’s time for the FDIC to step in. |
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