It’s what investment banks do, but it’s not how retail banking works.
Retail banks hold their assets in various forms (central bank reserves, bonds etc.) but can’t really ‘invest’ because they can’t accept the risk.
They make most of their money on lending, but can’t actually “lend deposits” because they are on the wrong side of the balance sheet. The bank levers up capital (money that shareholders have put in as well as retained earnings from previous years) to lend from.
Deposits do count as liquidity and are a fairly inexpensive form of it, which is why banks want you to move money into them and pay interest to encourage you to not transfer them out.
Retail banks hold their assets in various forms (central bank reserves, bonds etc.) but can’t really ‘invest’ because they can’t accept the risk.
They make most of their money on lending, but can’t actually “lend deposits” because they are on the wrong side of the balance sheet. The bank levers up capital (money that shareholders have put in as well as retained earnings from previous years) to lend from.
Deposits do count as liquidity and are a fairly inexpensive form of it, which is why banks want you to move money into them and pay interest to encourage you to not transfer them out.