In a loan contract, the availability of money is transferred to the borrower, who must return in at the end of the term and pay the interest. The borrower is free to use in in any way. In a deposit contract, the money is in custody and the depositor can withdraw it on demand, it is available to him at all times. The borrower - the bank - must keep a 100% cash reserve, if the reserve is smaller it is known as fractional reserve banking. (This is sometimes shortened to FRB for convenience.)
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