CZ: Bank Risks Stem from Liquidity Shortfalls Under Fractional Reserve System, Binance Processed $14 Billion in Withdrawals in a Single Week

Odaily News CZ stated at the World Economic Forum in Davos that faster, lower-cost technology itself does not create risks; it merely exposes problems more quickly. The root cause of risks faced by banks lies in the systemic design of the "fractional reserve system." Taking Binance as an example, during the crypto crash in December 2023, Binance faced a peak of $7 billion in asset withdrawals in a single day and cumulatively processed $14 billion in withdrawal requests that week, all without any issues. Any bank operating under a fractional reserve system would struggle to remain stable when handling liquidity pressures of such magnitude.