Forgive me if I mistake your point, but the deposits are not only  a major source of capital,

They are a source of liquidity. If depositors woke up one fine morning and decided that they would rather hold cash than FDIC-insured deposits, then the Fed would provide the cash. It must, if it wishes to defend its interest rate policy.

The reason banks like deposits is that they come with fewer strings attached than interbank or central bank loans, they are generally cheaper and, as you note, in some systems accepting deposits is a prerequisite for gaining access to interbank and central bank funding or other perks.

But operationally, you might as well split the deposit-taking bank into two: One that takes deposits and deposits them at the central bank, where the CB pays its policy rate on them, and one that originates loans, which it then rediscounts with the central bank, or - what comes to the same thing - in the interbank liquidity market.

This, incidentally, is the answer to your question elsewhere in the thread about what banks do with deposits: They put them in the central bank, and the central bank pays them its policy rate for that (give or take the CB's own bid-ask spread). They make money on the spread between the policy rate and the rate they pay their depositors, and their costs include servicing those deposits with ATMs, branch offices and so on.

And the justification for the the central bank providing  this loan service is to prevent liquidity failures from causing bank failures that make deposits disappear.

That's the depositor guarantee, no the discount window.

The reason the Fed lends to banks is that by the combination of setting an interest rate for such loans and demanding that banks maintain a certain liquidity reserve, the Fed sets an interest rate floor under the loans extended by the bank - if the bank must secure funding at 3 % from the Fed, on peril of being shut down, then it cannot very well charge less than 3 % for the loans it makes to other businesses.

And what do you think is the source of the equity of, e.g. Citibank ? Their equity consists of loans and other assets that they purchase with retained earning and deposits. No?

Their equity is the difference between assets and liabilities. This is unchanged when you deposit $100 at Citi. And because Citi can borrow from the CB or the interbank market at the policy rate, and place your deposit there at the same rate, the opportunity cost of creating a new loan is also unchanged by your deposit.

Essentially, deposit-taking institutions are service providers who manage the everyday payment clearing system. Which, incidentally, is the reason they IMO shouldn't be allowed to touch the lending business.

- Jake

Friends come and go. Enemies accumulate.