The bonds lose 20% (for simplicity the t-bills gain 0%)
Bank 1 ends with $1000 in t-bills and $800 in t-bonds (face value $1000)
According to some people Bank 1 can say “I have $2000 it’s just that I don’t have them right now”
Bank 2 starts with $1800 in t-bills and $200 in NFTs
In the same period the NFTs lose 100%
Bank 2 still has $1800 in t-bills, sells $800 and buys $800 of those t-bonds which are trading at a 20% discount to par
Bank 2 ends with $1000 in t-bills and $800 in t-bonds (face value $1000)
Bank 1 and Bank 2 are in the same exact situation
Bank 1 can say “I have $2000 it’s just that I don’t have them right now” but Bank 2 cannot do the same?
The bonds lose 20% (for simplicity the t-bills gain 0%)
Bank 1 ends with $1000 in t-bills and $800 in t-bonds (face value $1000)
According to some people Bank 1 can say “I have $2000 it’s just that I don’t have them right now”
Bank 2 starts with $1800 in t-bills and $200 in NFTs
In the same period the NFTs lose 100%
Bank 2 still has $1800 in t-bills, sells $800 and buys $800 of those t-bonds which are trading at a 20% discount to par
Bank 2 ends with $1000 in t-bills and $800 in t-bonds (face value $1000)
Bank 1 and Bank 2 are in the same exact situation
Bank 1 can say “I have $2000 it’s just that I don’t have them right now” but Bank 2 cannot do the same?