Can credit union and coop banks replace traditional banks completely?

Edit (adding additional question): Has there been an attempt to do this on a national or societal level?

  • Tarogar@feddit.de
    2·
    14 days ago

    Real scenario: you wouldn’t see that happen.

    Hypothetically it could cause economic collapse because now there wouldn’t be money to back up all the loans that are outstanding. Followed by mass layoffs of people and all the other fun stuff that comes with it.

      • Blue_Morpho@lemmy.world
        3·
        14 days ago

        It’s the idea that bank A wrote a loan and is required by the government to maintain a small amount of cash to back that loan. So if all the money goes to Credit Union B, Bank A would be declared insolvent.

        However that wouldn’t cause any economic collapse. Banks bundle and sell off their loans all the time. If Bank A no longer had deposits to cover a loan, they’d sell the loan to Bank B who did.