How does a Retail Bank generates income?

<p>Retail banks store the cash deposits of their clients and then use them to provide loans to other consumers. The Federal Reserve formerly decided that all banks must keep 10% of their demand and checking deposits in-house overnight, though this rule was changed to 0% in March 2020.<br>This reserve requirement is seen as a safety and liquidity measure. which means that the remainder of the deposit on hand is allowed to be lent out. The retail banks charge interest rates on these loans at a higher rate than they pay on customer deposits, which is how banks earn income.</p>

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