On: Regulators should treat stablecoins like banks

[mullingitover]

> But why was there bad debt on the market ?

This is my point, the focus on bad debt is like obsessing over the last snowflake that fell before the avalanche. The bad debt didn't cause the avalanche, the underlying structure of credit default swap contracts between the banks did. They were all writing each other checks that they couldn't cash. If the underlying problem of unaccounted-for credit default swaps didn't exist, the bad debt would've just been another snowflake falling on the ground, essentially.

[amanaplanacanal → mullingitover]

Doesn't all insurance work like this though? Insurance companies can pay for individual losses, but are bankrupt if everybody loses at once.

[mullingitover → amanaplanacanal]

Yes, but these weren't insurance companies, they were retail banks. That was the problem.