What is Credit?
Credit is a fundamental pillar of modern finance, enabling economic growth and financial flexibility.
At its core, Credit allows individuals and entities to access capital they don't currently possess, facilitating investments, purchases, and financial operations that would otherwise be impossible.
Credit as the Engine of Growth
Credit is a vital tool for creating financial leverage.
From general-purpose credit that enables borrowers to buy anything they need, to more specific purpose credit for assets like real estate, credit today is crucial for modern economies to function.
With global credit utilization reaching $238 trillion and private credit lines totaling $146 trillion, the demand for credit continues to grow up steadily, with no significant obstacles in sight.
These are some broad use-cases for credit provided by TradFi:
Draw out a Personal loan (data on what Americans do with personal loans are here)
Draw out a Mortgage to buy a 🏠
Business loans
Credit cards
Buying more stock by borrowing funds from a stock broker (margin trading accounts)
This demand for credit by borrowers is fulfilled by lenders who want to generate passive returns on their liquidity.
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