Remarkable, you've outed yourself as not understanding investments or the banking system, quite serious shortcomings for an economist, and yet you're still digging.
Makes one wonder what your domain expertise actually is. Do yourself a favour and ask someone who understands investments to explain.
Virgin money, as a randomly chosen ISA provider for example, has £66bn liabilities of customer deposits but only £11bn assets of reserve deposits. So your answer is 18% correct.
Personally I wouldn't know but I don't think that pressurising people to put their savings into a place where its value may drop is not something I feel is a good thing to do.
Wasn't the article saying that ISAs should be re jigged to encourage people to put their savings into equities rather than "cash"?
I'd have thought most ISAs are held by financially unsophisticated folk who are saving for a house or a car or suchlike and who want their money to be safe.
Yes, but ISAs are just a tax-advantaged wrapper, money held in them no safer than held in non-ISAs with same firms.
If money only held in Cash ISA for shortish term, the tax break isn't really worth that much...for many it's the difference between, say, 5% and 4% interest.
bank and building social deposits are created when banks and building docs extend credit, or when the govt deficit spends. The holders of the deposits thus created might choose to exchange the balance in the current account for a balance in a cash ISA account. Nothing goes anywhere.
building docs have assets, which are mainly customer loans and reserve balances (created when the govt deficit spends) and on the other side of the balance sheet they have mainly customer deposits and equity. The customer deposits can be current accts, savings accts or cash ISA accts.
the 'cash' part of a cash ISA is a perfectly reasonable description of such a deposit from the point of view of the deposit holder. It tells you nothing about the assets the bank has
Comments
Where do you think it goes?
Where it *doesn't* go is the equity market.
You do know what UK base rate is don't you?
And 3m SOFR?
Makes one wonder what your domain expertise actually is. Do yourself a favour and ask someone who understands investments to explain.
I really have no idea what point you are trying to make here
It doesn't refer to the assets your bank holds
As a deposit holder, you don't have a claim on any specific assets of the bank, just a claim on the bank
The original idea behind PEPs (ISAs' forerunners) was to encourage the public to invest in the UK stock market. Something it now needs more than ever.
I'd have thought most ISAs are held by financially unsophisticated folk who are saving for a house or a car or suchlike and who want their money to be safe.
If money only held in Cash ISA for shortish term, the tax break isn't really worth that much...for many it's the difference between, say, 5% and 4% interest.
And there's always NS&I.
Banks and