How do personal savings create capital C Banks use the money

Last updated: 3/1/2023

How do personal savings create capital C Banks use the money saved to borrow against deposits to pay interest on the funds held Funds are used to pay down debt owed by the financial institution on bad loans which helps create capital Funds accumulated in financial institutions are matched by the Federal Reserve which increases the amount of capital available Funds deposited by individuals into financial institutions are used to make loans for large or long term purchases