Deflation is devastatingly bad for banks. It discourages investment and new businesses because it shifts the maths in favour of just holding cash rather than investing in new businesses. No new businesses means fewer people need loans. And deflation makes loans more expensive for ordinary people, who stop borrowing. Banks profit only by lending out the money that they have. No loans, no profit.
Deflation is devastatingly bad for banks. It discourages investment and new businesses because it shifts the maths in favour of just holding cash rather than investing in new businesses. No new businesses means fewer people need loans. And deflation makes loans more expensive for ordinary people, who stop borrowing. Banks profit only by lending out the money that they have. No loans, no profit.