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Gwypaas · 2022-11-12 12:39:26

Reserves means nothing without also knowing the liabilities. Without that it is simply more smoke and mirrors.

MuffinFlavored | karma 4217 | avg karma 1.27 · | 2022-11-22 22:24:28

correct me if i am wrong but proof is reserves is half of the picture

liabilities need to be tracked + reported too, no?

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vkou | karma 14969 | avg karma 1.39 · | 2022-11-18 11:54:31

Proof of reserves is worthless without proof of outstanding liabilities.

And the only way you're going to provide the latter is through something called an audit.

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senttoschool | karma 2061 | avg karma 1.34 · | 2023-03-29 00:01:01

Proof of Reserves means nothing without liability. You can have reserves of 100 billion but your liability is 200 billion.

tim333 | karma 15551 | avg karma 1.53 · | 2021-11-12 11:57:32

Yeah but reserves != resources so your problem isn't a real one.

Nursie | karma 17810 | avg karma 2.14 · | 2023-03-29 02:45:16

Proof of reserves in itself is not proof of very much if the exchange has undisclosed liabilities and costs, which may supersede the claims of depositors in case of insolvency/bankruptcy.

dools | karma 6250 | avg karma 2.61 · | 2023-03-11 04:35:19

Well, even reserve balances are created out of thin air… it’s all just accounting

coryrc | karma 4077 | avg karma 2.2 · | 2021-11-05 23:30:20

You don't spend money proving new reserves when you have eighty years worth.

JumpCrisscross | karma 145242 | avg karma 4.56 · | 2023-05-03 00:44:32

Reserves aren’t as useful a metric as they are in the age of Bretton-Woods.

elindbe3 | karma 168 | avg karma 2.33 · | 2021-01-15 19:30:38+00:00

Its not just about reserves, though I believe you about the stockpile. It's also states not administering fast enough.

eru | karma 30335 | avg karma 1.29 · | 2022-07-26 04:39:23

Reserves are misleading. Because people only declare resources to be reserves that have had enough investment in them to be proven to some level.

See https://www.adamsmith.org/research/the-no-breakfast-fallacy for more background.

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Daishiman | karma 7437 | avg karma 2.91 · | 2021-05-16 22:10:36+00:00

You didn't even read the tweet. The issue being mentioned is that the backing reserves _do not exist_.

tick_tock_tick | karma 3482 | avg karma 2.72 · | 2023-03-12 19:51:59

A mean reserve requirements are stupid and have no place in real risk assessment so that's a good thing.

wrycoder | karma 5940 | avg karma 2.2 · | 2022-07-28 12:15:56

Reserve isn’t much of a problem. Never getting your funds is different.

irln | karma 295 | avg karma 1.92 · | 2015-09-16 19:59:04

Why is having a lower reserve ratio far worse?

CrazyStat | karma 3621 | avg karma 3.43 · | 2023-03-10 12:13:53

Surely having your reserves locked up in assets that you can't sell without taking large losses is a known risk?

jacooper | karma 6833 | avg karma 2.57 · | 2023-03-11 09:13:30

I imagine if they just said we had 8% of our reserves in SVB, now we have none. It would probably be interpreted as they didn't lose money and no body would notice.

latchkey | karma 15349 | avg karma 2.37 · | 2023-03-10 23:16:06

It doesn't help that they stored some of those reserves in a bank.

specialist | karma 10439 | avg karma 1.48 · | 2023-02-19 09:23:08

Also, I had the impression that reported known reserves, which are treated as an asset?, have been inflated.

pishpash | karma 1462 | avg karma 0.67 · | 2023-03-11 10:48:38

Reserves are but one tool in the arsenal and it's also for tightly managing the maximum leverage. If all your assets are not cash-equivalent and they fluctuate in value then there is no maximum leverage that can be guaranteed a priori and there is operational risk.