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{{ | {{a|banking|[[File:Life savings.jpg|450px|thumb|center|Your nest egg, sitting quietly and out of harm's way yesterday]]}}''Not'' a little pot of [[cash]] with your name on it sitting in a vault in a wood-paneled office in Pall Mall, however much this figment of the popular imagination rides on, even in the minds of those — certain [[credit officer]]s at [[investment bank]]s, for example — who really should know better. | ||
A [[deposit]] in a [[bank account]] is a form of on-call [[indebtedness]] where a customer lends its [[money]] to a [[bank]]. Yes: that’s right: ''you'' [[lend]] money to the ''[[bank]]''. Once you do this, ''it isn’t your [[money]] anymore''.<ref>This startles people. It has even been known to startle senior credit officers. For a patient explanation see our article on [[cash]].</ref> The [[bank]] pays you [[interest]] in return. This is, in large part, how [[bank]]s fund their lending activity. You know how, in ''Hamlet'', Polonius says to Laertes “neither a borrower or a lender be”? Well, banks are ''both''. | A [[deposit]] in a [[bank account]] is a form of on-call [[indebtedness]] where a customer lends its [[money]] to a [[bank]]. Yes: that’s right: ''you'' [[lend]] money to the ''[[bank]]''. Once you do this, ''it isn’t your [[money]] anymore''.<ref>This startles people. It has even been known to startle senior credit officers. For a patient explanation see our article on [[cash]].</ref> The [[bank]] pays you [[interest]] in return. This is, in large part, how [[bank]]s fund their lending activity. You know how, in ''Hamlet'', Polonius says to Laertes “neither a borrower or a lender be”? Well, banks are ''both''. | ||
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===Is this the same as [[client money]]?=== | ===Is this the same as [[client money]]?=== | ||
Yes - and no. With [[client money]], the person to whom you pay the money doesn’t ever hold it, but merely looks after it for you by depositing it in their name but on your behalf in a [[bank]] somewhere else. ''That'' bank is therefore the borrower. You are still the [[lender]]. | Yes - and no. With [[client money]], the person to whom you pay the money doesn’t ever hold it, but merely looks after it for you by depositing it in their name but on your behalf in a [[bank]] somewhere else. ''That'' bank is therefore the borrower. You are still the [[lender]]. More particularly, [[CASS 7]] [[client money]] applies only where you hold a money for or on behalf of a client in connection with [[MiFID business - FCA Rulebook Term|MiFID business]] or [[Designated investment business - FCA Rulebook Term|designated investment business]]. So it is a limited case. | ||
{{sa}} | {{sa}} | ||