Here’s Richard Murphy (who

[Young Master Smeet]

Here's Richard Murphy (who has Corbyn's ear):http://www.taxresearch.org.uk/Blog/2016/01/05/jo-stiglitz-needs-to-lean-what-banks-do-and-dont-do/

Quote:

The relationship between deposits and investment is much more remote and complex in that case. Effectively deposit taking is a service utterly distinct from lending although historically undertaken by the same institutions. What the deposit taking does provide is capital to underpin risk at very low cost. That is because money deposited in banks ceases to be the property of the depositor: it becomes the property of the bank. What the depositor is left with is a loan to a bank that may, or may not be repaid (hence the bank deposit protection schemes that would not, otherwise, be needed). So the cash deposited then becomes the bank’s risk capital in the event that they make poor lending decisions (as was seen in the case of Northern Rock). But that capital is a buffer to the bank, and not a source of funds for lending.

So, er, the deposits do cover teh loans, and are intermediated.