Although banks do many things, their primary role is to
take in fundsócalled depositsófrom those with money,
pool them, and lend them to those who need funds. Banks
are intermediaries between depositors (who lend money to
the bank) and borrowers (to whom the bank lends money).
The amount banks pay for deposits and the income they
receive on their loans are both called interest.
Depositors can be individuals and households, financial
and nonfinancial firms, or national and local
governments. Borrowers are, well, the same. Deposits can
be available on demand (a checking account, for example)
or with some restrictions (such as savings and time