This article has a surprising misunderstanding of the way banks work for a publication called “The Economist”. It is unintuitive, but banks do not and can not lend out deposits. Banks lever their capital (that is, paid up shares and retained profits) to lend, and that lending creates new deposits. Existing deposits and debt funding (money markets etc.) are useful as liquidity so they can settle interbank transfers, but they aren’t allowed to lend out of them, both out of regulations like the Basel framework, but also because it would violate accountancy rules (deposits are liabilities, and you can’t back a liability with a liability. In reality they
create the loan (asset) with a corresponding liability (the deposit).
The Bank of England (basically the UK federal bank) has published a good article on this - https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/m...