An ex-Fed senior trader described Reserve as something that neither commercial banks nor central banks can do alone: “What I really like about the Reserve Protocol is that it kind of combines the aspects of both banking and central banking. You can issue money against assets, like a commercial bank. But unlike a commercial bank, it’s not redeemable for higher forms of money. So there’s no run like you could have in a traditional bank system.” 🗣️ Joseph Wang at Monetarium 1: “The way that commercial banks handle asset volatility is that they just kind of don’t let you see what happens. Some assets don’t have to be marked to market. And of course, there’s only periodic disclosures. So in a sense, you are asked to close your eyes and just trust the banks. But then I guess if you have a protocol, that could be managed better.” “One thing that the commercial banks do well that I think would be worth thinking about going forward is the allocation of money. Reserve has a really good way of issuing asset-backed money. And that’s super important. But at the end of the day, it’s also about how money is allocated. What if someone doesn’t have assets and they would like to have money? Well, you can go to a commercial bank and they can create that money for you - such that people who don’t have assets can still be able to invest, go to school, get a loan, and so forth. Basically, the bank makes a judgment as to whether or not the borrower is worthy of having money, whether or not they repay the loan, whether or not the project is worthwhile. So being able to create money is one thing. I think that to be able to have a successful monetary system, it's also important to be able to have it allocated in a way. And that could still be done, I suppose, by lending - issuing tokens and then lending them. But then when you do that, you are also reintroducing many of the conventional risks that we see in the banking system like credit and liquidity.” “I would emphasize that being able to create money is super important. But having it allocated well is what makes money effective in creating an economy that has good growth but also more equality. It's really hard to know whether or not money will be allocated well. Are you going to be giving it to someone who is going to spend it wisely? So it's a lot of work for the commercial banks to do a very qualitative judgment to say, is this person credit worthy? Is this project viable? If you have a monetary system, in addition to having the base layer there, having an idea of how it could be better distributed to be able to benefit everyone, even people who don't have assets to get tokens, I think is really important for its adoption.”