Quote:
Originally Posted by Fuzz
So wait, the bank may actually have to offer incentives, like, say, paying interest of more than 0.5%, to attract money? Uhm, boo hoo? Yes, they may have to give up some of their tens of billions of yearly profits to be able to continue to function. I shall now shed some tears. "Protecting the insane profits big banks" is probably pretty low on the list of reasons not to do this.
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I don't care about the profits of big banks at all. I'm not a bank employee, shareholder, or fan.
But the loans the banks make to businesses and households (mortgages) are hugely important to our economy. They could make mortgages without deposits since they're mostly government insured so they can sell them as Canada Mortgage bonds. But loans to businesses aren't like that, and mostly require the banks to put up actual money that was in their possession.
If a digital coin has a bunch of people's day-to-day funds that will materially reduce the deposits in the banking system, and I think it's very likely that business loans would be what gets cut.
Now, the government would have that money instead, but the track record of governments at all levels and all political parties in making loans is terrible. Harper with the auto companies, the Liberals with Bombardier, the various politically motivated loans in AB across decades (as early as West Edmonton Mall under Klein). Basically I think the government replacing the banks as deposit takers/loan makers would be a bad idea because I think they'd do a worse job, and past history bears that out imo.