Why do banks borrow money from each other?

Answer The Federal Reserve requires banks to keep a certain supply of cash to cover deposits and financial transactions. If reserves fall short of requirements, banks borrow money from each other to remai... Read More »

Top Q&A For: Why do banks borrow money from each other

What Happens to the Money Supply If Banks Don't Loan or Borrowers Don't Borrow?

In the United States, the Federal Reserve Board ultimately controls how much money is circulating in the economy by controlling how much money banks have access to and how expensive it is to borrow... Read More »

Why do banks loan money to other banks?

Banks loan money to other banks to maximize returns on excess funds and to comply with reserve requirements imposed by the government. Since banks try to maximize the return on all deposits, lendin... Read More »

Who does the U.S. borrow war money from?

Article 1, Section 8 of the United States Constitution declares that the U.S. government can fund wars through the issuance of bonds and other obligations "to provide for the nation's defense and g... Read More »

Who does the U.S. borrow money from?

The biggest U.S. government lender is the U.S. government itself. The U.S. government has lent more than $4 trillion to itself by taking money from Social Security and Medicare funds. Foreign gover... Read More »