TFR on Nostr: I’d think the interest is coming from people who borrow and plan to pay back more ...

I’d think the interest is coming from people who borrow and plan to pay back more sats than they borrowed. However, since there is no way for the bank to create more bitcoin, if they make a bad loan both the bank and depositors are at risk. Depositors will be very attentive to the banks lending practices and the banks will be very conservative in their lending. I’d imagine many banking structures, included reserve lending, will exist to accommodate both the high risk/high reward and the low risk depositors. In fact some customers may just pay a fee (negative interest) to be at an institution that is more a custodian than a lender.