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The problem isn't the fact that the exchange rate remained 1:1, it's that they stuck by their claim that every USDT is backed 1:1 by USD. What replaced the seized reserves?

BoA doesn't claim to back every deposit 1:1 with physical cash. Far from it. The whole basis of fractional reserve banking is that they lend most of those deposits out to other customers. This is fine though, because the deposits are insured by a government-backed protection scheme.



If the crisis is broad enough, BoA and government will end up in the same basket: government has its own financial problems like huge national debt, rising unemployment etc.


The government can print money to resolve that situation.




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