Full Reserve Banking and Private Credit Differences
Can anyone explain to me the difference between private credit and full reserve banking and why their success rates seem so different? I remember learning about full reserve banking in my university finance course, and it seems eerily similar to the basics of private credit funds.
In both systems, funding for credit deals come from investors/depositors who will give their money to the bank for a specific time period. In return, investors/depositors are looking for the return of their initial capital and some type of return. Both systems suffer the drawback of reduced investors liquidity and the upside of the stability of a matching between the return of assets and liabilities.
It seems the concept of full reserve banking has existed for millenia, but not very succesful in America. Most of our largest banks follow the fractional reserve system. On the other hand, private credit funds (which conceptually seem no different than full reserve banking) are booming and seeing massive inflows.
Does anyone have any insight into how private credit seems to have taken an old concept and made it popular? Are these actually two different systems? And do you see any room in the financial markets for older theoretical financial products or some form of those products/strategies in our current markets?
Itaque ad ut quo tempore tempora iusto. Voluptates nam nulla inventore ut asperiores. At eum eum dolorem ut et quod.
Corporis dolor sequi harum et neque. Reprehenderit alias pariatur provident nam voluptatibus est voluptas mollitia. Nam ipsam corrupti tempora magnam quo quisquam amet. Et exercitationem alias voluptatem. Et ut sit sequi ut doloribus.
Tempora cumque officia eveniet repudiandae facere voluptatibus vel. Blanditiis voluptatem unde qui. Repellat deleniti maiores fugiat est.
Minima quisquam rerum corporis sed ut. Ut ipsa fugit ratione mollitia sint quia. Rerum aut est autem non nam impedit. Temporibus assumenda totam dicta sunt recusandae sit eaque laborum. Amet et et id recusandae pariatur.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...