Complex Systems with Patrick McKenzie (patio11) How money moves, with Erik Torenberg
13 snips
Nov 7, 2024 Erik Torenberg, founder of Turpentine and an expert in banking systems, joins the discussion on the complexities of money movement. They explore how banks use correspondent accounts and clearinghouses to facilitate transactions. The conversation shifts from the historical gold standard to the modern implications of stablecoins. Erik explains the different models of stablecoins, their potential for revolutionizing finance, and the challenges of regulation and compliance in the evolving financial landscape.
AI Snips
Chapters
Transcript
Episode notes
What is Money?
- Money is anything broadly accepted as a medium of exchange, store of value, and unit of account.
- These properties define money, regardless of government backing.
Deposits as Debt
- Bank deposits represent a debt owed by the bank to the depositor, not stored currency.
- Money transfers involve adjusting these debt relationships between banks and individuals.
Correspondent Accounts
- Correspondent accounts allow banks to settle debts between each other by adjusting balances.
- This system simplifies interbank transfers by establishing direct relationships.