Why are US banks rallying? The US banks by law are required to hold %10 of their holdings in reserve. Basel III requires a fraction less than what the US requires. Are the US banks rallying because if they already comply with Basel III and foreign banks don't, the US banks may have more potential clients until the foreign banks comply?
Also, if banks are calling in lines of unused credit in order to cover their new fractional reserve requirements, then less money is in circulation for clients to use. Wouldn't international companies and companies with large international exposure suffer as lines of unused credit are called in?
I am just trying to figure out if the rally is an emotional rally or if there really is something useful to stocks if there is less money in circulation. Thanks in advance!
Emo
Also, if banks are calling in lines of unused credit in order to cover their new fractional reserve requirements, then less money is in circulation for clients to use. Wouldn't international companies and companies with large international exposure suffer as lines of unused credit are called in?
I am just trying to figure out if the rally is an emotional rally or if there really is something useful to stocks if there is less money in circulation. Thanks in advance!
Emo