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Why isn't the Federal Reserve requiring banks to hold depositors' cash?
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The Federal Reserve Board reduced banking reserve requirements to zero in March 2020. Since that time, banks in the United States have not been required to actually hold any depositor money in the bank, making a flawed system — fractional reserve banking — worse.
With Silvergate Bank, Silicon Valley Bank and Signature Bank now shuttered, many in the U.S. are wondering if regional banks pose the same risks.
Zero reserve policies at the Federal Reserve only make further bank collapses more likely. Before the pandemic, banks had to hold 10% of deposits in cash.
When depositors put $1,000 in the bank, the bank wasn’t required to hold that $1,000. It holds $100 and loans out $900 to customers in search of a mortgage, a car, etc.
Read more on cointelegraph.comAbout this in other media
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