Sure, they then would "freeze withdrawls" during the run, which is the same as lying/faking their *proof of reserves* - ie hiding liabilities. Leaving themselves open to withdrawls ungaurded - to me is a purer signal to the market that they could cover.

Replies (1)

waxwing's avatar
waxwing 8 months ago
I mean, anything's better than nothing I guess! "We don't promise to honor withdrawals in less than 1 month" would be pretty bad. Some hedge funds do stuff like that.