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Or, more succinctly, what makes a bank a bank is that it will loan out money deposited by other people. If the money is just sitting there and can't be moved o
by piaste 4y ago
Or, more succinctly, what makes a bank a bank is that it will loan out money deposited by other people.
If the money is just sitting there and can't be moved or even counted without the owner's private key, it's not a bank, it's a vault.
- CraigJPerry 4y ago>> what makes a bank a bank is that it will loan out money deposited by other people No, a bank creates money to loan out from nothing. No deposits required. As a sibling comment points out, other jurisdictions exist so here's the UK central bank's explainer on the topic: https://www.bankofengland.co.uk/explainers/how-is-money-created https://www.bankofengland.co.uk/explainers/how-is-money-crea...
- fatneckbeard 4y agobut once the bank has made the loans, it has to keep track of how many it has made and how many are delinquent. i could be missing something.
- CraigJPerry 4y agoYeah of course, but that's not the point the parent was contesting. They claimed a bank loans from funds deposited which isn't the case. If a bank chooses to create an asset (your liability) by loaning money to you, if you then fail to repay, then they're in a bad spot. They're certainly not allowed to just delete the records of the loan being issued to get rid of the delinquent asset on their balance sheet.