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by throwaway-8c93
1986 days ago
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> banks loan out "your money" to companies When the bank lends you money, it usually doesn't go from its deposits. Usually, there's an offsetting loan the bank takes from other banks, at the inter-bank lending rate (e.g. Euribor). Then the bank lends you the money at, say Euribor + 1%, pocketing the difference. The funds for inter-bank lending come either by offsetting loans from the central bank, or from consumer deposits, both of which can be re-lended many times due to fractional reserve banking. |
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