Final answer:
Banks exchange money into currency. They attract depositors by offering interest, borrow money from other banks, and also make investments. Banks can also borrow in one currency and lend in their own currency, exposing themselves to exchange rate fluctuations. Option A.
Step-by-step explanation:
Banks exchange money into Currency.
To acquire money to lend, banks attract depositors by guaranteeing to pay them interest on their savings accounts and borrow money from other banks. In some countries, banks can borrow from a central government-run bank. Banks also make investments in stocks, bonds, and other financial instruments to earn higher rates of return.
When banks borrow funds in one currency and lend in their own domestic currency, they are exposed to exchange rate fluctuations. This can have economically destructive effects. Banks often borrow in large currencies like U.S. dollars or euros and then convert the funds to their domestic currency to lend to businesses and individuals.