A chance cost of shedding exchangeability and you can interest money might be lower than the cost of new debt and new attention expense. Banking institutions always charges over they pay for liquidity. One bequeath, or difference in these rates, is the bank’s earnings, and so the bank’s cost of buying currency will still be smaller than the speed they costs. The added exposure and you can obligations of the latest debt could also do chance pricing and make they more difficult to finance coming funding expenditures. Continue reading →