Yes and no. The government regulates the price that banks get paid per penny of deposited currency. The deposit insurance fund, an insurance fund on deposit in the US, is designed such that banks are prevented from receiving more than 50% of deposits on a daily basis. The interest earned on this insurance fund goes to the government. Thus, banks do not make any money when deposits are made free as a matter of policy, a policy which they were also in place in England and later the US. This insurance fund has been expanded in the US to take account of people who deposit their currency as well as deposits made free.
As banks do not make any money when depositing free currencies, they can make more than any other commercial bank. The Federal Reserve Bank has more than 25 trillion dollars in reserves. Most recently, the bank had about $4bn to $5bn in excess cash on its books. And for those of you in the US, with deposits of up to $100k every year, bank assets, which in the US totals $2.4 trillion, are currently owned by the Fed. However it is important to note that bank deposits to the Fed, which totaled $5.7 trillion in the first quarter of 2010, are still almost exactly half of the total US GDP. So it should be noted that the Fed has a lot more money on its hands than we do. Therefore, even if you deposit your entire income to a bank, your depositor account balance is still $50k. And that’s $50k of money which you could withdraw to pay your mortgages, pay your taxes or buy whatever.
So, bank depositors are not free to deposit any monetary amount they want. What they are free to do is hold an account with the bank at a high interest rate that would keep their bank assets in a steady state. This interest rate is usually set at 5-10% (although as of September 2010 it varies between 3-5%). They do not have to deposit any part of their money. They are, once again, able to keep it free. And, of course, banks would make a lot of money if they offered free deposits in addition to lending. That’s not what banks do, but it is what consumers would prefer. It would also create an incentive for banks to extend credit to their customers in the form of loans which they can make at zero interest at a later date.
The above is a simplified example of how the FDIC actually regulates bank depos
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