Is there something like a full reserve bank?
If you want to hold gold and have no counterparty risk, you go to goldmoney or bullionvault, and you pay them a fee every month to hold the gold for you in a vault. Perfect.
What if you want to hold dollars and have no counterparty risk? You can certainly go to your bank, withdraw the money and put the cash in a safe deposit box or under your mattress.
But my question is: hasn't anyone in the entire world created a more convenient way to hold currency with zero counterparty risk, like a bank that guarrantees it will not lend out a penny of your money? Of course such a bank would have to charge you a modest fee for the service.
As Cyprus has demonstrated, you give your money to the bank, which pays you zero interest if you don't want to make a CD, and then the bank is free to play russian roulette with your money (for example, buying Greek bonds after it was made public that the Greeks had hidden liabilities). If they get lucky and make money on their roulette, they keep the profits. If they get sufficiently unlucky and lose your money beyond their capital, you're the one holding the bag. Their incentives are "tails they win, heads you lose." With that kind of incentive, some people are rightfully going to worry that at zero interest rate, banks are not compensating them properly for the risk of depositing money. Are all those people left to hold cash in safe deposit boxes (and/or gold)?
Peter Schiff has one now and there is another one proposed in Canada. A group is buying out an existing little 17 branch bank to convert it to a non-leveraged bank. They have already applied for their license to the Canadian Government and are waiting for approval. There may be more that I don't know about.
Hi. Actually Peter Schiff's bank, europacbank.com, offers two services, none of which is what I asked:
1) Normal bank accounts
2) Gold/silver backed accounts
My question is how do you hold money (dollars / whaterver), not precious metals, but without the counterparty risk of banks, FDIC, etc.
Hmm actually their bank accounts ARE backed 100% by reserves. Interesting. Any other bank?
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