Definition ∞ A Multi-Bank Reserve refers to a system where the backing assets for a digital currency, typically a stablecoin, are held across multiple regulated financial institutions. This distribution of reserves aims to reduce single-point-of-failure risk and enhance the security and resilience of the stablecoin’s peg. It provides diversification for the underlying collateral.
Context ∞ The concept of a multi-bank reserve gains importance in discussions around stablecoin stability and regulatory compliance, particularly after market events underscore the significance of robust backing. News often covers stablecoin issuers adopting or proposing such models to increase transparency and investor confidence. Regulatory bodies may advocate for multi-bank reserve structures to enhance financial stability.
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