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  • Card 10 / 15:
    Given the danger of bank runs, why do banks not keep the majority of deposits on hand to meet the demands of depositors?

    Banks make their money from issuing loans and charging interest. The more money that is stored in the bank’s vault, the less is available for lending and the less money the bank stands to make.

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Source:  OpenStax, University of houston downtown: macroeconomics. OpenStax CNX. May 28, 2014 Download for free at http://legacy.cnx.org/content/col11653/1.3
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