Help us out. Is this not exactly why banks have to deposit X amount outside their doors?
Sorry, what do you mean?
Basically, the historical origins of different bank regulations are quite complicated and also differ from place to place, and they were often put in place by (political) coalitions of people who already had not one single motivation but a whole spectrum of them.
And then in addition to historical reasons, you also need to ask why things are still in place. Inertia is one answer, but it's not the only one.
To understand the regulatory framework for banks, the best place to start is the BIS and Basel III. https://www.bis.org/committees/bcbs/standards Generally speaking, international banks follow Basel III in addition to their domestic regulators’ capital requirements (which are probably also derived from Basel III, but have differences just to make things tedious).
However, BIS and Basel III (and the previous Basels) are just what's currently in force for most of the world. I suspect most people would be better served by more of an historical overview. But it also depends on what one is interested in.
Sorry, what do you mean?
-- think that's referring to bank deposit insurance schemes...
US banks tend to meet AT1 requirements by issuing preferred shares.
Binance's approach seems to be based on vibes and a vague promise
Do tell me, please: why do banks care about getting deposits? And why did Silicon Valley Bank get into trouble, when depositors left?
But let's assume you understood the BoE right. My questions still stand:
> Do tell me, please: why do banks care about getting deposits? And why did Silicon Valley Bank get into trouble, when depositors left?
(And before you answer something about regulation: the regulators had willingly blessed SVB's damaged balance sheet for quite a while, and they only collapsed when depositors decided to leave.)
You might want to read the section of the pdf you linked that includes:
> So if a given bank financed all of its new loans in this way, it would soon run out of reserves.
I know about central bank reserves. It's not fractional reserve banking, though. It's basically just regulation, but regulation done in the language of money, which banks (and any 5 year old) can understand.
Banks have many reasons for attracting deposits. Not least of which to get customers "on board" such that they might buy other financial services. But yeah, they also need to stay on the right side of regulation, or not run out of central bank reserves, if you prefer to think of it that way.
Ultimately it's all fake. Whether you think of it as "reserves" (that don't really exist, of course), or regulation is up to you. It's ultimately just a bunch of IOUs but raised up about ten levels of abstraction.
Anyway, the whole thing is incredibly complex and nobody understands the whole thing. I did think the commenter was referring to fractional reserve banking, but they might have meant central bank reserves, I don't know.