You all know that banks are financial intermediaries. Banks create the interface between borrowers and investors. They collect deposits from lenders and issue money to borrowers in the form of loans. Investors include, for instance, private households who put in part of their money profitably in the bank, but also the state or companies. Likewise, all economic actors can act as borrowers.

Companies need money to make investments. Private individuals take out loans if they want to buy a house or apartment, for example.  Also, private households can take out loans if they are planning a major purchase and the state also acts as the borrower.

The economic and money cycle

Banks are consequently essential players in the economic cycle. They play in the economic cycle alongside the state, private households, and companies. They ensure that the economic cycle remains in motion by sustaining the flow of money as intermediaries between the concern groups.