Commercial banks are financial intermediaries for getting financial freedom in home loan refinancing; that is, they come between borrowers and lenders. They borrow from their depositors and use the funds to make business and personal home loans and to buy other financial assets that yield returns to get financial freedom for them and for their partners. When banks purchase financial home loan assets they are supplying credit-either through direct business and personal home loans or through the purchase of financial securities, such as government bonds or corporate securities. In the process they create money for financial freedom, because their assets consist of a portfolio of home loans that are not money. They are not creating wealth, but financial freedom for a banks assets and liabilities are balanced. But by spreading risks over large numbers of different home loan refinancing, they have, in a sense, transformed their assets (a portfolio of home loan with various risks and maturities) into money (the demand deposits that are the banks liabilities).

Households and the cash managers of business firms deposit funds in bank checking accounts. These banks then want to use most of their funds to earn interest of them by making home loan or buying other financial assets.

However, banks must hold a fraction of the amount deposited them as home loan refinancing reserves, because their depositors may withdraw some of the funds that have been deposited. If your bank held no reserves of home loans and you wanted to cash a check at the bank, the bank would not have any cash on hand. You may feel financial freedom even if you buy something and pay by check, the person from whom you buy the item will probably deposit the check to another bank, and so your bank will have to pay out funds to the other bank.