why do money banks want money from you for loans when the money they give to you is not even in their vault ?
In: Economics
[US] Banks are required to keep some fraction (currently 0%) of customer deposits in cash or cash equivalents. They can’t lend out any more money if that requirement isn’t met, and as the only way to loan out more would be to increase the amount of customer deposits you hold.
Also, banks usually earn a lot more from interest/fees than they back in savings account interest.
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