Digital Dollars

Crypto currency, NFT’s and digital assets took the world by storm. Despite growing popularity, there are still those who are hesitant or opposed to the topic entirely. However, what some people may not know is that they already have digital dollars. The only difference? They can convert it into tangible currency.

The worry about digitalized money has probably existed for a long time. Whether that worry started during the founding of the FDIC in 1933, the Great Depression or the 2008 Financial Crisis, the concern remains the same. What happens when systems fail, are hacked or become compromised? According to the FDIC (Federal Deposit Insurance Corporation, in 2023, 96% of surveyed households had a bank account or were “banked”.

That number that you see when you log into your banking app or receive a receipt at an ATM is not physically tangible, not yet that is. It is common knowledge that banks are not obligated to have the money in your account on hand at their branch, but what if I told you they are not obligated to have any cash reserves for consumers?

Since March of 2020, the reserve minimum obligated for financial institutions is zero. Yes, that is correct, $0.00; there is no obligated minimum. This change was issued in light of the 2019 pandemic to provide more liquid to financial institutions. You can see additional information on the Reserve Requirements on the Federal Reserve’s site.

This blog is for educational purposes only. Mikaesbooks is not a tax advisor or legal professional.