How Do Banks Work?

How do banks work?
Banks are the great conjurors. They take our money because they persuade us that putting money in the bank is safer than hiding it in a sock or under the mattress. But here’s the great trick. They don’t keep it in the bank, they lend it out. So if we wanted our money back at the same time, we couldn’t have it. To help make sense of this, I am going to set up my own bank, Pesto Bank.


One of a series of short films featuring Business Editor Robert Peston. He examines how we got into the recent financial crisis and what you can do to protect yourself.