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Why Banks Pay Interest on Deposits — NeilW

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If banks create money out of nothing, and loans create deposits, then why do banks pay interest to depositors?TLDR; because the central bank sets their deposit rate above zero....New WaylandWhy Banks Pay Interest on DepositsNeilW

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If banks create money out of nothing, and loans create deposits, then why do banks pay interest to depositors?

TLDR; because the central bank sets their deposit rate above zero....

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NeilW
Mike Norman
Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

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