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$22 Trillion in US Banking System Backed by Just $225 Billion at FDIC: Bitcoin Proponent Gabor Gurbacs

$22 Trillion in US Banking System Backed by Just $225 Billion at FDIC: Bitcoin Proponent Gabor Gurbacs

A strategy advisor at Vaneck/MVIS is highlighting the disparity between the money held at the Federal Deposit Insurance Corporation (FDIC) and the amount of money sitting in the US banking system.

In a series of viral tweets, Gabor Gurbacs examines the latest data from the FDIC – a US agency whose mission is to maintain stability and public confidence in the nation’s financial system.

According to the FDIC, $124.5 billion is currently on the agency’s balance sheet, with an additional $100 billion line of credit available from the U.S. Treasury, for a total of $224.5 billion.

That compares to a staggering total of more than $22 trillion in the US banking system, says Gurbacs.

Source: FDIC

The renewed scrutiny of the FDIC’s balance sheet comes amid the collapse of Silicon Valley Bank, which shut its doors after losing $1.8 billion from selling mainly US bonds that are supposed to offer banks a safe way to diversify.

However, the price of those bonds has dropped significantly due to the Federal Reserve’s steep interest rate hikes.

Many in the startup community, which Silicon Valley Bank largely catered to, are calling for the U.S. Treasury to step in and bail out the bank, as happened during the 2008 financial crisis.

American banks align with the FDIC to promise customers that deposits up to the amount of $250,000 will always be covered in the event of a collapse.

But anything in excess is not insured.

The US and most nations around the world back a system known as fractional reserve banking, which requires banks to hold a small percentage of their deposit liabilities in liquid assets as a reserve, while being at liberty to lend the remainder to borrowers.

It’s a system that the pseudonymous creator of Bitcoin, Satoshi Nakamoto, called out as a core reason why he, she or they created the leading cryptocurrency.

“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money…

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