A bank cannot simply print or create its own money in order to lend money. It must actually fund itself in order to lend. Funding the balance sheet requires that a bank has in place a source for obtaining the funds. This can come through three sources; its own funds, its customers deposits or the wholesale market.
Key learning objectives:
How does the bank ensure the balance sheet balances?
What are the three sources banks can use to raise funds?
What happens if a bank cannot raise funds from these sources?