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By storing your cash in a bank, you are exposed to both the bank's insolvency and the devaluation of the currency by a central bank. By keeping it under your mattress, you are only exposed to the latter. Of course, by not storing your money in a bank, you are 100% responsible for securing it, which is the primary drawback that most people face. You are also more directly exposed to fluctuations in currency valuation since fiat is generally inflationary and the money is doing no work for you at home - but quite a few people still find it worth all the drawbacks to keep a chunk of cash at hand.



> By storing your cash in a bank, you are exposed to both the bank's insolvency

Only for very large amounts, at least in Europe, the central bank insures your money from its own reserves in case of bank failure up to a certain amount, AFAIK typically in the hundreds of thousands of €/local equivalent.


If a bunch of banks go under at once, or even one big bank with a sufficient number of claims, who's to say the insurers will even be able to pay out on that? Nonetheless, I always find this type of apocalyptic thinking to be humorous - why do people think that their cash will be worth anything if the financial system collapses? Another motivation would be if you are concerned about having your assets frozen.


The central bank pays.

As an example, in the UK personal deposits of a failed bank are guaranteed by the Bank of England up to £75,000.

The Bank of England can always cover the amount, since they can simply print money as needed.

http://www.fscs.org.uk/what-we-cover/products/banks-building...


It's not insurers who pay it's the central bank. It has control over the currency itself; because of that it can (and has to) always pay.

> Another motivation would be if you are concerned about having your assets frozen.

I'm with you on that one.




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