Commonwealth Bank will reportedly enable its 6.5 million customers to buy, sell, and hold bitcoin in 2022..... https://bitcoinmagazine.com/business/australia-largest-bank-to-integrate-bitcoin-services-in-app
This is a big move if it happens. The custodial nature of Commbank's wallet, and assuming that the same APRA and ASIC regulatory framework that the Commbank has to abide by in other banking services would also apply to this offering, then investors such as SMSFs could enter the market for cryptocurrencies where previously trustees may have been unwilling to take custody of their own positions because of any potential auditing concerns that may have arisen.
I guess the custodial nature of a big Bank like the CBA could help those not wanting to take all the responsibility of what crypto brings and possible serious mistakes, but once 'in custody' you are not really in charge of your assets, and I bet you would not be able to move your assets back into private wallets, Trezor, Ledger or otherwise, and will subjected to any kind of regulatory measures they will gradually add to the fore. After all, just as your deposit into any account becomes Bank's property, since you are lending them those assets, what stops them using those assets as 'fractional reserve' once they are monetized and the whole she-bang goes again in full circle...
That's not the way it works. Deposits aren't used as "assets" under a FRB system, and the fractional reserve banking system won't kick up again "in full-circle" because it's never actually stopped. Edit to add: banks add money to the economy by creating deposits first, not by accepting deposits.
The amount of new money commercial banks add to the economy is determined by the number of credit worthy individuals applying for loans in an economy. Adding the capacity to buy and sell cryptos does not add new money to the economy.
I have changed a few words to satisfy your 'administrative fervor' but the fact remains they are only interested in crypto to counter something the can not yet control, your crypto will never leave their grasps, yes it will be monetized and obviously they will be regulatory measures added but I doubt very much that it will enough to make any difference... a leopard can not change its spots. Edit to add: Every dollar is an IOU, someone's debt and Central Banks can create money out of thin air, if you wanna call that creating deposit first, fine, but it is created for the purpose of usury...
My "administrative fervour" was actually pointing out a common misconception. Central banks do not create money out of thin air - that is the job of commercial banks. The function of the CB in that area is merely just to guarantee that every private dollar a commercial bank creates, is backed by an Australian government dollar. In modern times they have also taken on the function of buying government bonds from banks and institutions on the secondary market. By way of further explanation of how money is created when a credit-worthy individual applies for a loan and succeeds the bank deposits money by way of a keystroke on a keyboard into the account of the borrower. Then if required, after the loan has been approved the bank will go looking for additional reserves in order to maintain its capital liquidity ratio. Crypto holdings will not be "monetised" by banks because if banks need money due to liquidity issues then they either sell bonds, offload assets, issue more shares, or borrow from other banks. Banks don't sell the assets of depositors to raise funds because they have other more effective and more timely measures to raise funds if required.
I'm very interested in this topic of who creates money but am still a bit of a novice, after reading a few of your responses Shiney, it seems you know quite a bit about this subject so thanks for sharing Which type of bank are you referring to here, The Reserve or a commercial Bank? How do they create deposits? Why is it "applying" for loans as opposed to successfully applied for loans? Thanks again
Technically money is NOT created if a bank shifts savings into a loan deposited in someone's account, and the savings are no longer available on demand. The fact that both deposits are available on demand means money is printed.
Look up the work of economist Richard Werner. He has a paper outlining in simple terms how commercial banks print money via loans.
It's a fun topic and can be infinitely more pleasurable than watching the Wallabies' handling errors. I'd just caution how much you think I might know with this: Commercial. By crediting successful loan applicant's accounts with funds. It was just the turn of phrase I used. If no one has successfully applied for a loan then the only way new money can enter the real economy is by government spending. If you want some reading I recommend Warren Mosler's Soft Currency Economics.
