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#economics #money
Question
the Basel capital requirement rules are of very limited use in preventing credit bubbles. All the banks would have to do is tell the vendors who arrive in their branches brandishing cheques for £100,000 that their deposit accounts are only paying 3% interest and that they would do better to subcribe for new shares in the bank, which pay 5% or 10% (in the good years). Shares in a bank are just a slightly different kind of 'money', but can be created out of thin air the same as the mortgage loan or the [...].
Answer
deposit

Tags
#economics #money
Question
the Basel capital requirement rules are of very limited use in preventing credit bubbles. All the banks would have to do is tell the vendors who arrive in their branches brandishing cheques for £100,000 that their deposit accounts are only paying 3% interest and that they would do better to subcribe for new shares in the bank, which pay 5% or 10% (in the good years). Shares in a bank are just a slightly different kind of 'money', but can be created out of thin air the same as the mortgage loan or the [...].
Answer
?

Tags
#economics #money
Question
the Basel capital requirement rules are of very limited use in preventing credit bubbles. All the banks would have to do is tell the vendors who arrive in their branches brandishing cheques for £100,000 that their deposit accounts are only paying 3% interest and that they would do better to subcribe for new shares in the bank, which pay 5% or 10% (in the good years). Shares in a bank are just a slightly different kind of 'money', but can be created out of thin air the same as the mortgage loan or the [...].
Answer
deposit
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that they would do better to subcribe for new shares in the bank, which pay 5% or 10% (in the good years). Shares in a bank are just a slightly different kind of 'money', but can be created out of thin air the same as the mortgage loan or the <span>deposit.<span><body><html>

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Mark Wadsworth: Banking made easy
realise what money is, namely the physical or electronic record of who owes whom how much; 'money' is a liability as much as it is an asset; you can only have cash in the bank if somebody somewhere owes the bank money.12. As a final thought: <span>the Basel capital requirement rules (see para 4 and 5 above) are of very limited use in preventing credit bubbles. All the banks would have to do is tell the vendors who arrive in their branches brandishing cheques for £100,000 that their deposit accounts are only paying 3% interest and that they would do better to subcribe for new shares in the bank, which pay 5% or 10% (in the good years). Shares in a bank are just a slightly different kind of 'money', but can be created out of thin air the same as the mortgage loan or the deposit.I hope that clears things up a bit!* I'm using "a tenth" for illustration purposes only, it's a bit more complicated than that. My latest blogpost: Banking made easy

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