Why Do Banks Want Our Deposits? Hint: It’s Not to Make Loans

The reality of how money is created today differs from the description found in some economics textbooks: Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits.
. . . Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.
The post Why Do Banks Want Our Deposits? Hint: It’s Not to Make Loans appeared first on BSNEWS.

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