If Goldman had no solvent customers to lend to, they would still be issuing those. Because they are not issuing them to fund lending, they are issuing them to arbitrage against the discount window (or the interbank market, but that comes to the same thing in the final analysis).

Now, it is certainly possible - in principle - for the central bank to create a high enough spread between the support rate and the main refinancing rate that the absence of solvent customers would disincentivise banks from accepting deposits. But that's not the case today, has not been the case historically, and there is no obvious reason for the central bank to ever do so in the future.

- Jake

Friends come and go. Enemies accumulate.