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Not necessarily. It depends on the institution. Some loans ARE made out of deposits. Those that aren't need to be funded in the money markets - you borrow from
by retube 12y ago
Not necessarily. It depends on the institution. Some loans ARE made out of deposits. Those that aren't need to be funded in the money markets - you borrow from another financial institution to cover the amount lent out. Not sure the BoE paper makes that clear.
- bocajuniors 12y agoNot really.The bank needs two kinds of government issued money.One is cash, to cover their clients withdrawals.The other is government issued electronic money(reserves) to cover transfers between banks(as demanded by clients).