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Discussion - Economy > Bank liquid reserves to bank assets ratio
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further discussion on Economy > Bank liquid reserves to bank assets ratio
tom norman
13th March 2011 |
So this means what? The 'cash' they hold from depositors versus the assets the bank holds? In other words... if the bank is lending out what it receives on deposit, it covers that loan principle it creates with collateralized assets. And these are the claims on 'other government [bonds], nonfinancial public enterprises, the private sector, and other banking institutions?
Is that it? So if you have a big ratio you are a parking lot for cash. Not investing?... Look at Panama 25 trillion to 1 ratio. Which is to say what? No collateral holdings... so they don't lend and invest? They just sit on the money?... or in very low yielding instruments?...
What is going on here? I can imagine people put their money there so governments can't get to it. But what? You send to Panama money, and they do what? Put it in their bank? What does that mean?
...what I am getting at is they have to deposit it in other banks don't they? And they have to hold some sort of interest earning instrument... so How Can this Ratio Be?
Or is it that they own a penny in real currency... That is silly. that would just multiply the ratio by 100.
There isn't that much money in soverign funds, is there?
Somebody please help me figure this one out. I thought Fort Knox was big. but Panama must have been hit by a Tsunami of cash.
My question is, where do they 'keep' their money. And if it is earning nothing, then who is to say it is there? |
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