Circle CEO: Will protect themselves by reducing bank deposits

According to reports, a few days after the US federal government stepped in to protect the now defunct Silicon Valley bank depositors, Jeremy Allaire, the CEO of Circle, said in an interview with CNBC that although the USDC had resumed anchoring, the banking system risks had not completely disappeared. He explained that the risks of the broader impact on the US financial system appeared to be systemic, and I do not believe that these risks had completely dissipated at this time. Circle will protect itself by reducing bank deposits. From the perspective of Circle, the main preventive measure is to ensure that we are exposed to the hidden risks in the partial reserve banking system as little as possible. （dailyhodl）

Interpretation of this information:

The CEO of Circle, Jeremy Allaire, stated in an interview with CNBC that although USDC had resumed anchoring, the risks associated with the banking system had not entirely disappeared even after the US federal government stepped in to protect the bank depositors. Allaire explained that the broader impact of these risks on the US financial system appeared to be systemic and still posing a challenge at present. For Circle, reducing bank deposits is one of the ways to protect against potential hidden risks in the partial reserve banking system.

The message suggests that despite the US government’s intervention to protect Silicon Valley bank depositors, Jeremy Allaire still perceives risks associated with the broader impact on the US financial system as systemic. It further indicates that Circle is actively implementing measures to safeguard itself, such as reducing bank deposits, to minimize exposure to hidden risks in the banking system.

One of the keywords of this message is USDC. USDC (USD Coin) is a digital stablecoin that aims at providing stable currency value to users by pegging one US dollar to one USDC. Due to its stability, it has become increasingly popular as a digital asset for trading, remittance, and hedging in recent years.

The second keyword is systemic risks. The term systemic risks refer to risks associated with the system as a whole and not just a single entity, such as the banking system in this case. These risks have a significant impact on the economy, and their effects can spread across different sectors, leading to widespread instability.

The third keyword is partial reserve. A partial reserve banking system is a system where banks withhold only a fraction of deposits as cash reserves and lend out the rest to borrowers. This system can lead to hidden risks as banks may have insufficient reserves to cover all depositor withdrawals, leading to bank runs and instability in the financial system.