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30 sats \ 0 replies \ @freetx 15 Jun \ on: How Stablecoins Can Be Destabilizing for the banking system bitcoin
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
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