Why is cash considered a liability for banks?

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Curious. Trying to understand what’s happening with svb, and this concept does not click yet.

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21 Answers

Anonymous 0 Comments

They don’t own the cash. The cash they have is from people depositing money with their bank. Eventually those people will want their money back. The cash is not an asset that the bank owns, rather it is something they have to pay back eventually to their customers. Therefore it is a liability.

Anonymous 0 Comments

They don’t own the cash. The cash they have is from people depositing money with their bank. Eventually those people will want their money back. The cash is not an asset that the bank owns, rather it is something they have to pay back eventually to their customers. Therefore it is a liability.

Anonymous 0 Comments

The cash isn’t theirs, typically; it’s owned by the depositors. The banks also absolutely need that cash in order to function, because if anyone comes in and asks to cash out their accounts, the bank needs to be able to pay out.

Anonymous 0 Comments

The cash isn’t theirs, typically; it’s owned by the depositors. The banks also absolutely need that cash in order to function, because if anyone comes in and asks to cash out their accounts, the bank needs to be able to pay out.

Anonymous 0 Comments

They don’t own the cash. The cash they have is from people depositing money with their bank. Eventually those people will want their money back. The cash is not an asset that the bank owns, rather it is something they have to pay back eventually to their customers. Therefore it is a liability.

Anonymous 0 Comments

When you deposit $100 at a bank, that is still your money. The bank owes you $100 whenever you want it. So for the bank, it represents a debt. Debts you owe are liabilities, debts owed to you are assets.

Anonymous 0 Comments

When you deposit $100 at a bank, that is still your money. The bank owes you $100 whenever you want it. So for the bank, it represents a debt. Debts you owe are liabilities, debts owed to you are assets.

Anonymous 0 Comments

The cash isn’t theirs, typically; it’s owned by the depositors. The banks also absolutely need that cash in order to function, because if anyone comes in and asks to cash out their accounts, the bank needs to be able to pay out.

Anonymous 0 Comments

When you deposit $100 at a bank, that is still your money. The bank owes you $100 whenever you want it. So for the bank, it represents a debt. Debts you owe are liabilities, debts owed to you are assets.

Anonymous 0 Comments

Because the banks don’t own the money. They have to give it back on demand. They’re effectively borrowing the money and the debt is immediately callable whenever the lender wants it back.