needs and importance of deposits
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Bank deposits are a common occurrence in which customers deposit funds into their accounts. The bank must provide cash to the customer whenever funds are withdrawn; if not withdrawn, however, banks will typically use the funds as investments or loans to other customers until the depositor makes a withdrawal. This process is significant in regards to money supply, and has several ramifications.
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Money Creation Through Demand Deposits
Banks can affect the money supply through demand deposits, or loans that the bank funds through cash deposits it receives. By using interest rates to create their own profit, banks are also creating money to increasing the money supply in the economy.
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