/biz/ - Business & Finance

>>15835912
false.

Most banks just take the deposits and buy treasury bonds with them pocketing the difference.

When the bank makes a loan, they create a debt security and buy it from you for the principle amount of the loan which must be paid back with interest.

The central banks interest rates are for funds the bank holds at the central bank.

By lowering interest rates it encourages the banks to lend out more money instead of hold it at the central bank, this means more competition to make the loans, so the banks lower rates to entice more borrowers