The issue and risk with banking is counter-party risk.

SVB was focused on early-stage tech companies and I think there is reduced counter-party risk there. There were two things that caught SVB off guard as money stopped flowing through the system:

• VC investments dropped sharply, so new customer deposits dropped significantly, and
• their customers burn rates remained higher than SVB expected

Because the customers of SVB are mainly companies, not consumers, I don’t know how the FDIC insurance covers depositors. I think because of the highly localised nature of their banking/customers (tech companies who rely more on equity investment than debt) that there may not be significant counter-party risks which domino through the economy. What we may see is “just” some comparatively wealthy software engineers who lose their job. Maybe some banks who have mortgages to these engineers come under pressure?

The bigger issue that’s more likely to cause systemic risk is commercial real estate.
Loans and mortgage-backed securities tied to CRE are coming under pressure as rates have risen while vacancy rates have stayed high post-covid. If you can’t rent your space the value of your building drops. The landlords end up being squeezed through higher holding costs (much higher interest as rates rise) and their Loan to Value Ratios reaching levels which may breach debt covenants.

This area of banking system is more debt-based so more likely to have greater systemic risk, more counter-party risk as debtors fall like dominos. There will be assets (office buildings) that have been financed by multiple lenders, there will be smaller specialised lenders in the space who have large CRE loan books who are likely to have large tranches of their own funding being borrowing from larger institutions. Probably also entities who have CREIT assets on their balance sheets which will need to be written-down which will cause havoc etc etc

I think it’s a stretch to say US consumers move to US debt when SHTF. It’s commercial and international entities who move to US government debt because it’s seen as a safe-haven. That’s what happened in March 2020, everything tanked because everyone wanted US cash and US debt.

US CBDCs are supposedly still in trial phases, I think we are a while off them being launched and think it’s tangential to this chaos. I don’t think they’ll be presented as the answer to the current mess that’s unfolding. The “answer” to this current mess is likely to be some new form of QE and the kicking of the can further down the road.

yes! at the same time I would focus on writing more fun stuff 😎

I predict there will be another blog post from me today this week...

Great, I couldn’t figure out how you were doing that. I am a nooby at this. My son suggested I get involved in it because I read the news on the internet, anyway.

The freedom. The politics.

We are definitely aware of such a potential issue, it's true that at some point low amount orders can/will end up being dust. We are therefore working on the following solutions:

• increase the minimum buy amount (currently 25 CHF/EUR)
• updated the referral program not to send too small earnings to the user's wallet (only once user accumulated 10 CHF/EUR)
• working on a solution to encourage users to consolidate: it's more tricky than it sounds as we have a lot of newbies as users
• moving to lightning: we recently released our non-custodial lightning wallet and we'll keep improving from here on to also provide buy/sell orders to lightning directly

Full RBF enables people to defraud services who let you walk away with goods and services without a confirmation, which is incentive compatible with miners wanting more fees.

The other case is that some wallet users accidentally don't opt into RBF then get their funds stuck for weeks on end.