Comment

Comment by stephen_g

They don't. They might get some interest on the cash you gave them when you deposited the money, or for a transfer the reserves that they got from settling deposits from the central bank, or from lending those reserves to another bank. Or they might convert those assets into bonds etc.

But the 'bank deposit' itself is just an entry on the liability side of the bank's balance sheet, they can't profit from that. The bank might pay interest on it to the depositor because they want to encourage them to deposit more, because deposits coming in give the bank cheap liquidity, so stop them having to borrow reserves from other banks etc. to maintain liquidity.

parent stephen_g 8 years ago

Discussion

Live from the official Hacker News API

A modern reader for Hacker News · SvelteKit + Skeleton