Banks have two major functions - deposit creation and lending functions. Banks accept deposits from the savers or the surplus units of the economy. On the other side, they lend money to those who are in need of funds either for investment, consumption, or precautionary purposes. Money deposited by clients is treated as liabilities of banks while money that is used by banks in their lending functions are considered as assets.
To be able to survive and to stay in the market continuously, banks should be able to convince people to entrust their money to them by making deposits. However, it is the duty of the banks to safeguard whatever was entrusted in them, utilize or invest them in a way that amounts are available when needed by the depositors. ...
The expert discusses marking all assets and liabilities to the markets.