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Well, aren't you "loaning" the bank your money when you put it in an account? If everyone wanted to withdraw all the money from all their accounts at once the b
by kizer 5y ago
Well, aren't you "loaning" the bank your money when you put it in an account? If everyone wanted to withdraw all the money from all their accounts at once the bank would be unable to pay; you get paid interest because you take on slight risk.
- Armisael16 5y agoThe bank is also providing a service (tracking your money, making it easy to manage and transfer) and that costs. We’ve just ended up in a situation where the cost of the service exceeds the value of the interest paid.
- rutthenut 5y agoIn the UK at least, I'd say we have ended up in a situation where banks found that their approach to 'selling financial services' vastly abused their customers and now they are having to pay massive sums in compensation, they need to fleece account holders in some other way to meet their income and profit targets. Long-gone are the times when high street banks were based on loaning out the deposits from savings accounts. Building Societies do/did this, but of course the banks bought up most of those too in their spending sprees of M&A to become 'bigger and better'. Well, bigger anyway
- imtringued 5y agoBank notes are a liability of the central bank. When you withdraw your money the central bank can just buy the bonds off that bank. Of course a bank without bonds is basically dead but from the perspective of the person holding onto the bank note nothing changed assuming the zero lower bound is strictly followed by the central bank.