"When I opened my bank account, I deposited say £5000 cash. What does the bank do with this money?" It burns it. Probably quite literally. The cash represents

"When I opened my bank account, I deposited say £5000 cash. What does the bank do with this money?" It burns it. Probably quite literally. The cash represents a transfer from the central bank into the commercial bank's deposit account at the central bank - for which it receives an interest rate. Cash is just a receipt for deposits held at the central bank.