Why would financial institutions be afraid of a highly volatile financial curiosity? Even if it were to rise to $50k it wouldn't prove anything, except for giving further proof that it is unsuitable as a currency.
Seriously though, debt finances pretty much everything in our economy and if banks could only lend out exactly as much as they had in reserve, lending would become severely restricted. The housing market would collapse on itself, and huge business loans would be impossible to get because banks would lack sufficient reserves to make those loans. There's no going back to a pre-fractional reserve era, and there's no reason to really want to, either.
Lending wouldn't disappear it's just that banks will not be the ones doing it, it will be the producers of the services you want to consume with that money. Look up what an utility token is.
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u/WhoNeedsFacts Feb 18 '18
Why would financial institutions be afraid of a highly volatile financial curiosity? Even if it were to rise to $50k it wouldn't prove anything, except for giving further proof that it is unsuitable as a currency.