However though fee and custody companies are necessary banking capabilities, they’re peripheral to the enterprise mannequin of a conventional financial institution. The enterprise mannequin of a conventional financial institution is to borrow at a low rate of interest, lend at a better rate of interest and pocket the distinction. Conventional banks are necessary liquidity creators and distributors, not solely in monetary markets however within the wider economic system. Because the U.S. found after the failure of Lehman Brothers in 2008, when banks cease lending the economic system grinds to a halt. Crypto initially eschewed lending, however shortly found that with out it the ecosystem was about as liquid because the floor of Mars. When there’s a lot HODLing and little lending, liquidity is gold.
