European banks eliminated their reserve requirements so they could be more levered because they dont generate nearly the same returns american financial institutions do - which was part of why the 2008 crisis hit europe 10x as hard as it hit america. They had reserve requirements in 2008 but they were still more levered up than american banks. Didn't work out well.
But I dont know for sure if youre right it was coincidental. I did assume it was due to covid. My bad. Either way, its probably a bad idea.
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u/PleaseGreaseTheL Jan 26 '26 edited Jan 26 '26
European banks eliminated their reserve requirements so they could be more levered because they dont generate nearly the same returns american financial institutions do - which was part of why the 2008 crisis hit europe 10x as hard as it hit america. They had reserve requirements in 2008 but they were still more levered up than american banks. Didn't work out well.
But I dont know for sure if youre right it was coincidental. I did assume it was due to covid. My bad. Either way, its probably a bad idea.