On: The Banker Who Said No

[MaysonL]

The trouble is that the trust a bank or any such institution receives is not, and probably cannot be, well correlated to its trustworthiness. Cf. Bernard Madoff, and the vulnerability of any bank (especially when no insurance exists) to a run.

[dantheman → MaysonL]

The threat of a run is only available if you lend out demand deposits, which is something that could be eliminated.