Comments by "" (@downshift4503) on "Banks don’t loan out depositor’s money" video.

  1. They don't require them. However if you make a deposit into a bank, bank reserves follow on the asset side. The bank gets 5% interest paid by the BoE for that. It's currently lucrative for the banks.
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  2. not exactly, they create bank deposits from loans. If you want to extract that deposit as cash, they have to use a bank reserve to settle it with the BoE. Central banks create reserves. Fractional reserve doesn't really exist (edit: in the UK, US etc)
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  3.  @antonyjh1234  commercial banks. When you take out a loan they create the loan asset for themselves (their asset) and create a deposit for you (their liability) that is held in a deposit account.
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  4. They can borrow reserves if needs be and the system is full of them anyway, but it is true that reserves follow deposits. Also the loaned monies flow in every direction.
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