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Is that true? If their digital token investments went to zero value would they have no equity? I don't understand how that would cancel out their cash reserves, precious metals, loan income, fiduciary deposits etc etc
They have $68.1 bn in assets and $67.9 bn in liabilities, therefore book equity (or "capital") = 68.1 - 67.9 = $200 mm.
If you reduce assets by $200 mm due to credit losses / market declines then you (obviously) reduce capital by $200 mm as there would be no offsetting reduction in liabilities (because the liabilities are pegged to the dollar). Therefore your equity goes to zero and you have no headroom if all the depositors wanted their money back.
This is why banks have capital (a surplus of asses over liabilities) to absorb losses.
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NickCJ
Stonehedge
Is that true? If their digital token investments went to zero value would they have no equity? I don't understand how that would cancel out their cash reserves, precious metals, loan income, fiduciary deposits etc etc.