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Banking & Payments

Commercial Bank

Also called: retail bank, high street bank, depository institution

A commercial bank takes deposits and makes loans, earning the spread between them. Its balance sheet is structurally fragile by design: deposits are repayable on demand while loans last for years, so a bank is always borrowing short and lending long. Everything else — capital rules, deposit insurance, the lender of last resort — exists to make that mismatch survivable.

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