Reply to post: Re: Secured risk

Lloyds Bank bans Bitcoin purchases by credit card customers

I ain't Spartacus Gold badge

Re: Secured risk

No. The banks were bailed out by the taxpayer because they had taken secured risks, but due to the nature of banking their asset book contained lots of long-term debt they were unable to call in. But their debts were all in the form of short-term loans to their customers or slightly longer maturity bonds on the markets.

This is called liquidity transfortmation, and is one of the main social purposes of banking. It's what turns all our small savings accounts into money that can be invested for the long term in businesses and us buying mortgages.

Becuase of this we require Central Banks to loan the banks vast amounts of cash at no notice, to stop bank runs. All that cash was paid back within about a year (most much quicker) as that infinite backing is what stops the system collapsing an causing another 1930s great depression.

2 UK banks were so fucked that they required actual taxpayer bail-outs. For which the government took a matching stake in shares, and has sold off one of those holdings at a profit. Just RBS still to go.

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